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Auto Industry · Direct Sales · Franchise Law · Volkswagen
Ten Colorado dealerships, including Volkswagen, Audi, and Porsche franchisees, are suing the state over its decision to allow Volkswagen-backed Scout Motors to sell its off-road electric vehicles directly to consumers.
The dealerships argue that Volkswagen is attempting to bypass the Colorado Dealer Act, which generally prohibits automakers from owning and operating dealerships that compete with their franchisees. They contend that Scout, as a Volkswagen subsidiary, does not qualify for exceptions granted to pure EV manufacturers or those without existing affiliated dealerships in the state.
Despite the Colorado Motor Vehicle Dealer Board approving Scout's license by a 6-2 vote, the plaintiff dealerships have filed a lawsuit in Denver District Court to prevent the license issuance. Scout Motors maintains its direct sales model is customer-centric and will bring investment and jobs to Colorado.
This legal battle highlights the ongoing tension between traditional automotive distribution networks and evolving direct-to-consumer sales strategies.
