Scout Motors’ direct sales fight heats up in courtrooms and legislatures

Scout Motors, the off-road EV brand backed by Volkswagen, is running head-first into legal and political obstacles as it tries to ditch dealerships and sell directly to consumers.

What’s happening: In Florida, a group of Volkswagen and Audi dealers has sued Scout, arguing that its reservation system violates state franchise laws and that it isn’t properly licensed as a manufacturer, Automotive News reports.

• Major auto retail groups—including Morgan Auto Group, Braman Automotive, and Rick Case Auto—are behind the lawsuit, the first of its kind targeting Scout’s sales model.

Meanwhile—in South Carolina, where Scout is investing $2 billion in a massive factory in the town of Blythewood, state law also currently prevents automakers from selling vehicles directly to buyers. 

The issue? Unlike other states with similar bans, South Carolina also blocks manufacturers from operating service centers unless they have brick-and-mortar dealerships—throwing a wrench into Scout’s plan for a $20 million service and fulfillment center at its production site.

• Scout had hoped to plant its flagship “Scout Experience Center” in the heart of Blythewood as part of an ambitious national sales strategy. Now, that plan is in limbo.

Yes, but Scout now has a powerful ally in Governor Henry McMaster, who is pushing to change the law.

• On Monday, McMaster threw his support behind the South Carolina Consumer Freedom Act, a bill that would legalize direct sales for EV makers like Scout. 

• The proposal, filed by Rep. Mark Smith (R-Berkeley), doesn’t name Scout directly, but it would clear the way for the company’s sales model while also opening the door for other automakers.

• The bill already has bipartisan backing, but it faces stiff opposition from South Carolina’s auto dealer lobby, which represents 281 franchised dealerships generating over $15 billion in annual sales.

Between the lines: Scout Motors argues the traditional dealership model doesn’t work for modern car buyers.

• Scout’s sales strategy would cut out middlemen and let customers handle everything—financing, service scheduling, and purchasing—through a single digital platform. 

• The company claims that working with a franchised dealership could add as much as 50% in additional costs and lead to a worse customer experience.

Public opinion: Gallup polling shows trust in car dealerships is at just 8%—barely higher than Congress. 

• And for a company trying to build a new EV brand from scratch, Scout simply doesn’t trust traditional dealers to be the face of its vehicles. 

• Scout is also concerned that dealers may not push Scout’s vehicles as aggressively as traditional gas-powered SUVs.

Bottom line: Scout Motors believes that direct sales are what today’s consumers want, but dealer groups see a much bigger risk—an uneven playing field where automakers bypass long-standing retail partners while still benefiting from the brand strength and customer base those dealers helped build.

Become an automotive insider in just 5 minutes.

Get the weekly email that delivers transparent insights into the car market.

Join 90,000+ others now, it's free:

In today's automotive landscape, car buyers invest more time than ever in researching, considering, and comparing options. But for dealers, the challenge lies in pinpointing the audience ready to make a purchase.

Enter Premier by Edmunds.

Premier offers dealers a groundbreaking way to connect with in-market car shoppers precisely when, where, and how they prefer. With over 20 million monthly visits, Edmunds.com is the go-to destination for buyers seeking market insights, expert advice, and budget tools to make informed decisions.

Through Edmunds Premier, dealers gain access to this highly coveted audience. Simply list your new and used inventory on Edmunds, and watch as qualified, in-market traffic flows directly to your vehicle detail pages on your website.

Don't miss out on this opportunity to elevate your dealership's visibility and sales performance. You can sign up for Premier today at Edmunds.com/CDG.