Volkswagen and Audi dealers in Florida are suing Virginia-based Scout Motors for moving forward with direct sales of its sport-utility vehicles to customers – an action the dealers allege violates the state’s Motor Vehicle Dealer Act.
The group of VW and Audi dealers filed the lawsuit on Feb. 3 in the 11th Judicial Circuit Court in Miami-Dade County. They argue that the Scout brand is 30% owned by the Volkswagen Group of America and is prohibited under the act from selling or leasing its vehicles to Florida retail consumers.
Florida’s law is similar to laws in other states that protect franchised auto dealers from competition from franchisor manufacturers or their common entities, according to the lawsuit.
“As recently as 2023, the Florida Legislature adopted provisions to strengthen the Motor Vehicle Dealer Act and clarify that a manufacturer, distributor, importer 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,” the complaint states.
From 1960 to 1980, Scout SUVs and off-road vehicles were sold in dealers throughout Florida and nationwide. The brand was revived in 2021, when the Volkswagen Group of America bought the rights to the brand, with plans to manufacture electric Scout trucks and SUVs for release to the public in 2027, according to the lawsuit.
Florida consumers have already placed deposits to purchase the vehicles through direct sales.
“As a result of accepting deposits from Florida consumers for the retail purchase of a motor vehicle, Scout has violated section 320.64(24) (of the Motor Vehicle Dealer Act),” the complaint says.
State lawmakers passed the act in order to ensure consumers retain the benefits of healthy competition among dealers for vehicle prices and service and to protect the hundreds of thousands of jobs created through Florida’s dealership system, according to the lawsuit.
John Forehand, one of the attorneys representing the dealerships, said direct sales of Scout vehicles would lead to substantial financial hardships for VW and Audi dealers, which want to recover three times their estimated financial loss, an amount of more than $750,000.
“Those dealers rely on Volkswagen Group of America for vehicle and parts inventory, indeed, for their continued financial viability,” Forehand told the Florida Record in an email. “Scout represents a direct competitor to existing Volkswagen and Audi dealers, but a competitor which has the advantage of being connected through common ownership with Volkswagen Group of America.”
Scout Brands did not respond to a request for comment, but the company has made the argument that it functions independently of VW management.
“In short, the Florida Legislature passed the statute at issue to prevent existing franchised dealers from having to directly compete with another entity in which the dealers’ franchisor (or its controlling ownership) has a financial stake,” Forehand said, adding that Scout has yet to file a response to the dealers’ complaint.
Scout Motors has faced a similar legal action in California as well. In December, the California New Car Dealers Association sent a letter to Scout threatening legal action unless the company stopped plans for direct consumer sales in that state. The association argued the company was in violation of a California law barring such sales.