Colorado’s Department of Revenue just gave Scout the greenlight to practice its direct sales model in the state.
We’re still a couple years off from new Scout Traveler SUVs and Terra trucks actually hitting the streets. Nonetheless, VW Group subsidiary Scout Motors hasn’t just been in the trenches getting its new products ready for launch. It’s also been lobbying state governments to allow it to bypass the traditional franchise dealership model, and sell directly to the public like Tesla, Lucid and Rivian. Within the past few days, Colorado officially signed off on the effort, allowing the company to go directly to the public rather than through a dealer system (per Automotive News).
On December 16, the state Department of Revenue’s Specialized Business Group, which includes a Motor Vehicle Dealer Board, voted 6-2 to allow Scout Motors’ license to sell vehicles directly within the state. The automaker’s roadmap is built on such a practice, with CEO Scott Keogh likening the experience to buying your iPhone directly from Apple, instead of having to go through a big-box retailer.
It’s a start, but where could the company hit roadblocks?
Now, it’s worth noting that even though the Board within the Colorado Department of Revenue favor the decision, it is not actual policy just yet. Colorado dealers immediately decried the decision, calling Scout Motors’ efforts a “circumvention of the traditional franchise system”. Former AutoNation executive and dealer network CEO Mike Maroone said it is being insincere in its messaging that it is a separate entity to the rest of Volkswagen Group (which does have dealers under VW and Audi brands, among others). In an interview with CBT News, Maroone said, “If it walks like a duck and quacks like a duck, it’s a duck.”
Colorado’s market accounts for a significant share of total EV shares throughout the U.S., after other populous states like California, Texas and Florida. The ultimate decision could trigger the beginning of the kind of momentum Scout Motors will need to push in those states as well.
It’s worth noting, on the EV direct-to-consumer sales model, even Tesla still isn’t allowed to sell vehicles straight to consumers in several states, including Texas. To get around that, Tesla treats the actual sales transaction as an out-of-state purchase, before shipping it to a service center. Scout could (and may, depending on circumstances) do the same thing, although conducting business that way creates additional steps for all parties involved.
The Colorado Motor Vehicle Board’s decision to allow Scout to sell directly to the public, barring a successful appeal from the state’s dealer association, could set some precedent for Scout to at least widen its presence to sell straight to the public through company-owned showrooms. In this case, Tesla, Rivian and Lucid are already allowed to sell direct-to-consumer thanks to S.B. 20-167 passed in 2020. So, Scout will most likely be able to press forward, at least in the state of Colorado.
