Scout Faces Lawsuit in Florida from VW and Audi Dealers Regarding Direct Sales Strategy | Carscoops

      A group of dealers claims that Scout's sale of $100 reservations for the Terra and Traveler is illegal.

      The lawsuit challenges Scout's assertion that it will operate independently from the Volkswagen Group.

      In recent weeks, Scout has strongly defended its direct-to-consumer sales model.

      The two models from the brand will be produced at a specially designed factory in South Carolina.

      Though Scout Motors is far from starting production of the Terra and Traveler models, much less releasing them, it is already encountering a legal challenge concerning its direct-to-consumer sales approach. After upsetting dealers in California and South Carolina, Scout is now facing a lawsuit from several VW and Audi dealerships in Florida.

      The lawsuit, submitted on February 3, includes numerous Audi and VW dealerships throughout Florida and claims that Scout's sales methods are illegal. It specifically targets the EV brand’s reservation system, through which buyers can secure an order for the SUV and pickup truck. The lawsuit argues that this practice infringes state law.

      Lawyer John Forehand explained, “Florida has a clear definition of the word ‘sell,’ and Scout Motors is actively engaging in sales that contravene state law. Accepting a buyer deposit in Florida equates to making a sale, which is not permitted.”

      The lawsuit also questions Scout’s corporate structure, as noted by The Verge. The dealers argue that Scout does not operate as an independent entity since it is owned by the Volkswagen Group. Nevertheless, both Scout and VW maintain that the brand will function as an independent company and is therefore not required to sell its vehicles through an established dealership network.

      A lawyer involved in the case pointed out that if a manufacturer owns 30% or more of another company in Florida, that company is classified as a “common” entity. He stated that because the Volkswagen Group owns over 30% of Scout, it fits this classification.

      Scout Motors has not given a response to the new lawsuit. However, a spokesperson reaffirmed comments made by Scout's VP for Growth, Cody Thacker, late last year, emphasizing that a direct sales approach is most beneficial for the brand.

      “While using franchised dealers might suit some brands and their customers, a direct sales model best meets our customers' needs and aligns with our strategic customer-first vision as we introduce a new vehicle platform, a new production facility, and a new retail network to launch the Scout Traveler SUV and Terra truck.”