The EV maker aims to cut out dealers, calling U.S. franchise laws anti-competitive in a game-changing letter
6 hours ago
- Scout described franchise laws as burdensome restrictions that limit competition.
- The automaker claims no other U.S. industry faces more anti-competitive regulations.
- A few months ago, Scout was sued by the California New Car Dealers Association.
While President Donald Trump stepping into office for his second term has thrown up a number of challenges for local carmakers, his commitment to reducing regulation also stands to benefit many manufacturers. Scout Motors wants to be one of them and is urging the government to eliminate state motor vehicle franchise laws, allowing it to sell its upcoming vehicles directly to consumers.
Scout has been fighting feverishly to get current pro-franchise laws scrapped since last year. The company’s vice president for government and regulatory affairs, Blair Anderson, recently sent an 11-page letter to the Department of Justice’s Anticompetitive Regulations Task Force, describing current laws as “burdensome restrictions on competition.” He added that no other sector of the US economy has more anti-competitive laws than the auto industry.
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“We urge the Department of Justice and this Administration to probe these protectionist, anticompetitive schemes and to open the automotive industry to fair competition and innovation,” he wrote. “These schemes are in direct conflict with the possibility of free and open markets where all can compete.”
According to Anderson, it makes no sense to force new car manufacturers to adopt the dealer franchise model, “especially when the new manufacturer has not asked any dealership to place any investment in distributing its vehicles.”
Scout is facing challenges in some states to sell vehicles straight to consumers. For example, in April, the California New Car Dealers Association sued both Scout and VW to try to block them from direct-to-consumer sales.
VW’s Footprint
The letter was sent in late May, and it’s unclear if Scout has heard back. However, parent company VW is eager to let the world know just how important it is to the US economy. Recently, Volkswagen Group of America (VWGoA) commissioned Deloitte to release a study focusing on its investments and footprint in the US.
The report reveals that the automaker supports 164,470 direct, indirect, and induced jobs in the United States and contributes nearly $44 billion in economic output. In the last six years, VWGoA has added more than 30,000 direct and indirect jobs while increasing its economic impact by more than $10 billion. Its operations, as well as VW and Audi dealerships, also generated $4.55 billion in federal, state, and local tax contributions.
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