Providers and Administrators in blue logo
MenuMENU
SearchSEARCH

California Dealers Sue Scout

Trade group follows Florida dealers in taking legal action to stop what it considers a state franchise law violation.

April 22, 2025
California Dealers Sue Scout

Scout 'Traveler' concept SUV. Production for it and the Terra truck are scheduled to start in 2027.

Credit:

Scout Motors

2 min to read


 

California auto dealers, after failing to stop Scout Motors from selling directly to consumers, sued the startup for what they claim is a breach of California franchise law. 

The California New Car Dealers Association filed the suit in San Diego County Superior Court Tuesday, following Florida Audi and Volkswagen dealers, which sued Scout in February.

Ad Loading...

The trade group, which represents about 85% of California’s franchised dealers, tried to stop Scout’s direct-sales plans just before the winter holidays with a cease-and-desist letter, but the automaker refused to abandon the sales structure. 

CNCDA claims Volkswagen is illegally competing with its VW dealers through Scout, though VW and Scout say Scout operates independently of VW as a sister company, according to Automotive News.

The trade group said it has 45 VW dealers in its membership but that the lawsuit “sends a message to every automaker.”

Its president, Brian Maas, said in a press release announcing the lawsuit that “VW dealers would welcome the opportunity to sell Scout trucks and SUVs, but their manufacturer business partner is denying them that opportunity, in direct violation of California law. 

Volkswagen can’t pick and choose which vehicles to sell on its own or through its franchised dealer network, reserving the most profitable or desirable vehicles for itself. Illegal competition will harm not only dealers but also the communities and car buyers that they serve. That is why the Legislature unanimously approved this important law.” 

Ad Loading...

CNCDA alleges both unfair competition and false advertising and, along with stopping direct Scout sales, seeks civil penalties it said could surpass $35 million.

Kjell Gruner, CEO of VW’s American arm, told Automotive News at the New York Auto Forum this month preceding the city’s annual auto show that he understands franchised VW dealers’ perspective about Scout’s sales plans, though he said VW has no control over Scout’s business decisions.

LEARN MORE: VW Bus Feted

Originally posted on Auto Dealer Today

More Industry

Blurred photo of red car moving down a road
Industryby Hannah MitchellMarch 31, 2026

Automakers Have More Tricks Up Their Sleeves

JD Power analysts see auto retail faring this year’s storms well through various means, though it acknowledges conditions are challenging to accurately predict.

Read More →
background view of Washington D.C. with the capitol building and cherry trees. Text says 'What's the Cost?' with two diverging arrows and the Providers and Administrator's logo
Industryby Lauren LawrenceMarch 31, 2026

Insurance Rates Continue to Fall

Car insurance premiums have continued to decline so far this year, the overall national average settling at $138 per month in March, according to Insurify data.

Read More →
Bar graphic showing car segment activity for the previous week
Industryby StaffMarch 31, 2026

Black Book: Weekly Market Update

Last week's wholesale auction activity was stable, though buyers exercised selectivity as they focused on certain segments.

Read More →
Ad Loading...
gray background with white text that says Dealer Debrief 03/25/2026 with Lauren Lawrence. picture of a white woman (Lauren) with red hair
Industryby Lauren LawrenceMarch 25, 2026

Dealer Debrief: Safety, Supply & Partnership

In this week's Dealer Debrief, host Lauren Lawrence covers a new safety assessment, current inventory issues, and a new payables process for dealerships.

Read More →
Line chart depicting retail used-vehicle auction volume
Industryby StaffMarch 24, 2026

Black Book: Weekly Market Update

Both conversions and values were up last week, though business was spotty depending on the segment in question.

Read More →
red battery-electric vehicle using a Tesla Supercharging station
Industryby Lauren LawrenceMarch 24, 2026

Stellantis Expands Charging Network

Five of its brands now have greater access to battery-electric vehicle charging through Tesla’s Supercharger network across North America.

Read More →
Ad Loading...
blue subaru crosstrek in city with Save with SUVS text and Providers and Administrators logo
Industryby Lauren LawrenceMarch 17, 2026

Safety Drives Insurance Rates

Sixteen out of the 20 cheapest vehicles to insure in 2026 are SUVs, according to CarInsurance.com, largely because of their safety features and lower repair costs.

Read More →
Close-up photo of the front of a new-looking white car
Industryby Hannah MitchellMarch 17, 2026

New-Vehicle Shoppers Get Some Relief

Overall conditions in February tipped slightly in consumers’ favor as prices stayed high, granting a reprieve of sorts just before the war on Iran commenced and started to reverse the welcome trend.

Read More →
row of cars, used vehicle demand spikes, chart showing data spike, F&I and Showroom logo
Showroomby Lauren LawrenceMarch 11, 2026

Used Market Gains Speed

New-vehicle sales fell year-over-year for the fifth month in a row in February, making retail deliveries the slowest they’ve been since 2023, according to a CarGurus report.

Read More →
Ad Loading...
text reading Auto Loan Defaults Reach 2% on desk background with car keys, calculator, notepad, and toy car
Industryby Lauren LawrenceMarch 10, 2026

Auto Loan Defaults Measured Amid Inflation

According to LendingTree data, the average monthly auto loan payment was $540 in the fourth quarter, and the average credit score for those with a recorded default was 529.

Read More →