VW dealerships sue Colorado to stop Scout Motors from selling direct
Front Range Auto Dealerships File Lawsuit Against State Over Scout Motors Decision
Ten Front Range auto dealerships have taken legal action against the state of Colorado for allowing Scout Motors, a manufacturer backed by Volkswagen, to sell off-road electric vehicles directly to consumers in the state.
The lawsuit argues that Colorado law prohibits Porsche, Volkswagen, and Audi from owning or controlling dealerships, but Volkswagen is attempting to bypass this restriction through Scout Motors.
Scout Motors, known for manufacturing beefy 4×4 vehicles between 1960 and 1980, was acquired by Volkswagen in 2021. Volkswagen plans to start selling new Scouts in 2027 through a direct sales model, where Scout will own its stores and service centers.
This move has sparked a conflict with Volkswagen, Audi, and Porsche dealers who feel it is unfair to compete against a Volkswagen subsidiary like Scout Motors.
The matter was brought before Colorado’s Motor Vehicle Dealer Board, which voted 6-2 to grant a dealership license to Scout Motors. The decision has led to legal challenges from local dealerships represented by Adrian Castro and Randy Earnest.
The Colorado Dealer Act generally prohibits automakers from owning dealerships, but exceptions exist for electric vehicle makers and manufacturers without affiliated dealerships in Colorado. The plaintiff dealerships argue that Scout Motors does not qualify for these exceptions.
Matthew Groves, CEO of the Colorado Automobile Dealers Association, emphasized the importance of franchised dealerships in providing consumer support. He noted that while direct-to-consumer sales are allowed for some companies like Tesla and Rivian, pushing aside franchise dealers creates unfair competition.
Despite the ongoing legal battle, Scout Motors remains committed to its direct sales approach, citing a customer-focused experience as their priority.
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