Florida is the next battleground between franchised dealerships and automakers looking to sell directly to the consumer.
Volkswagen and Audi dealers in the Sunshine State filed a lawsuit against Scout Motors that alleges its direct-sales model for vehicle sales and reservation system violates laws meant to protect dealers in the state. Among 61 plaintiffs include Morgan Auto Group, Braman Automotive, and Rick Case Automotive Group.
Filed on Feb. 3 in Miami-Dade County Circuit Court, the lawsuit is directed at the Volkswagen Group’s ability to have direct sales of the electric vehicles as well as if Scout is an independent brand or not. The dealers in the suit, representing roughly 60-65 percent of VW dealerships in Florida, claim that Scout should be barred from accepting deposits for vehicles sold in the sunshine state and that the brand should be barred from doing business in Florida because it doesn’t have the proper manufacturer license.
Scout Plans
VW is building a $2 billion factory in South Carolina and expects to begin production of the new vehicles in 2027. The Scout Traveler SUV and Scout Terra pickup will start under $60,000. Scout, which will be able to produce 200,000 vehicles annually in South Carolina, is currently planning 65-70 percent of production as SUVs versus pickups.
Scout Motors CEO Scott Keogh recently stated he expects the electric SUV and truck brand will have around three dozen U.S. retail centers when sales begin in 2027, eventually rising to 100. Other EV sellers like Tesla, Rivian and Lucid have direct sales models. What will be the at the center of the fight are state laws barring automakers with independent dealer networks from selling directly to consumers.
“I think it’s critical moving into the future in unstable environments to control your customer, control your margin, control your operational excellence,” Keogh said, referring to the direct sales plan.
Florida Law
According to Richard Sox, a lawyer representing the Florida dealers as well as California dealerrs in a separate lawsuit, noted Tesla and Rivian are unaffected they are not affiliated with an automaker with franchised dealers.
Florida’s Motor Vehicle Dealer Act blocks common entities from selling directly to consumers. According to the suit, an automaker like Volkswagen or one of its common entities “may not compete with its franchised dealer network by offering any brand of new motor vehicle for sale to Florida consumers other than through a licensed dealer.”
Under Florida law, if an automaker owns more than 30 percent of any brand or entity, it’s considered a “common entity.”
