- Two VW dealers filed a class action over Scout sales.
- They argue Scout is a shell-company workaround.
- Over 150,000 buyers reserved Terra and Traveler EVs.
Volkswagen’s electric Scout brand hasn’t even begun building trucks yet, but it’s already racking up thousands of reservations and more than a few legal objections.
Two Volkswagen dealerships filed a class action lawsuit this week, represented by Hagens Berman, claiming the automaker is violating its own dealer agreements by selling Scout vehicles directly to consumers online. The suit was filed in federal court in Virginia and could become the latest front in the long-running dispute between automakers and franchise dealers.
More: Legacy Dealers Sue Colorado For Calling Scout An EV Brand
The dealers argue Volkswagen created Scout Motors as a workaround to sidestep franchise rules. According to the lawsuit, the new company is essentially a shell designed to distribute vehicles without involving the traditional dealer network.
A VW By Another Name?
“In truth, Scout is simply an offshoot of Volkswagen,” the lawsuit claims, adding that the direct sales plan is a “blatant breach” of Volkswagen’s dealer contracts.
“We believe Volkswagen was fully aware of its legal responsibilities to dealership owners when it chose to sell Scout vehicles directly to consumers online,” said Steve W. Berman, managing partner and co-founder of Hagens Berman. “It appears that VW has violated its own contract with its dealerships, the very businesses that serve its brand.”
Sunrise Imports LLC of Long Island, New York and Curran Volkswagen Inc. of Stratford, Connecticut are leading the case, though they’re asking the court to certify a class representing Volkswagen dealers across the United States. Their complaint argues that franchise agreements require Volkswagen to sell vehicles through dealers rather than directly to customers.
Huge Loss Of Earnings
Dealers say the stakes are significant. Scout has already accepted more than 150,000 reservations for its Terra pickup and Traveler SUV, which are expected to enter production next year for MY28. Buyers can secure a place in line by paying a reservation fee online, a system dealers say effectively bypasses them entirely.
That’s a problem because dealers don’t just earn money from selling vehicles. The lawsuit points out that they also lose opportunities for financing, servicing, repairs, and future sales when they’re cut out of the process.
“They are being deprived of their right and ability to sell these cutting edge vehicles,” the lawsuit argues, claiming the decision could cost dealerships substantial revenue.
Volkswagen and Scout have previously defended the strategy by insisting Scout operates independently from VW’s existing dealer network. Scout executives have argued that a direct sales approach helps launch the brand faster while giving customers a simpler buying experience.
The legal battle isn’t new. Dealers in states including California, Colorado, and Florida have already challenged Scout’s direct sales model in separate lawsuits. Those cases also question whether the brand truly qualifies as independent from Volkswagen.
