who purchased the former Michael Volkswagen on Blackstone Avenue in Fresno in 2022<\/a>.<\/p>\nLaw at center of dispute<\/p>\n
The protest names three respondents: Volkswagen Group of America, Scout Motors Inc., and Scout Motors Sales LLC, which holds a California dealer license and is operating a direct-to-consumer sales model for the upcoming Scout Traveler SUV and Scout Terra pickup truck, both expected to begin production in 2027.<\/p>\n
At the heart of the dispute is AB 473, a 2023 California law that explicitly prohibits manufacturers from competing with their franchised dealers through affiliate brands. The law passed unanimously \u2014 76-0 in the Assembly and 36-0 in the Senate \u2014 and was signed by Governor Newsom in October 2023.<\/p>\n
Starving dealers, feeding Scout?<\/p>\n
The complaint alleges Volkswagen has not only competed directly with its dealers through Scout, but has also deliberately withheld desirable products from its dealer network. It argues Volkswagen has allocated billions of dollars toward Scout without a reciprocal investment in Volkswagen-branded product, leaving dealers without hybrids, body-on-frame SUVs and pickup trucks \u2014 precisely the vehicle types Scout is bringing to market. The complaint notes that nearly 87% of Scout reservation holders preferred a gas-generator hybrid version, a powertrain Volkswagen has not made available to its franchised dealers.<\/p>\n
The protest also raises the issue of Scout\u2019s own prior acknowledgments. In letters to California legislators in July and August 2023, Scout\u2019s general counsel Neal Sitron confirmed his understanding that AB 473 would prohibit Scout from bypassing VW\u2019s dealer network. Scout proceeded with its direct sales model anyway.<\/p>\n
The violation was brazen enough, the complaint alleges, that AB 473\u2019s author, Assembly Majority Leader Cecilia Aguiar-Curry, wrote directly to Scout and VW executives in February 2025 demanding compliance. Her letter was copied to California Attorney General Rob Bonta and DMV Director Steve Gordon.<\/p>\n
Dealers seek license revocation<\/p>\n
The Clovis filing goes further than a standard franchise dispute. Beyond asking the Board to order Scout to stop taking reservations, it requests the DMV revoke Scout Motors Sales LLC\u2019s dealer license entirely.<\/p>\n
Miles Brandon, president of Capistrano Volkswagen and a member of the Volkswagen Dealer Council, said: \u201cFiling a protest was not a decision any of us made lightly. But VW has left us no choice. They are competing against the very dealers who built their business here.\u201d<\/p>\n
Scout Motors didn\u2019t address whether its sales model complies with AB 473, saying it does not comment on pending litigation. In a statement, the company said it believes a direct sales model \u201cbest supports our customers\u201d as it launches the Traveler and Terra. Volkswagen Group of America had no further comment beyond that offered by Scout\u2019s media team.<\/p>\n
The 14 protests follow a federal lawsuit filed by the California New Car Dealers Association against Volkswagen and Scout. On March 30, a federal court denied motions to dismiss, allowing that case to move into discovery.<\/p>\n
\u201cCalifornia dealers want what VW promised them when the company awarded them franchises: the opportunity to sell vehicles made by their business partner without having to worry about their manufacturer competing directly with them,\u201d said Brian Maas, CNCDA president.<\/p>\n
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