I’m not a parent, but I know it can be a real pain when the kids start fighting with each other, and I’m sure that’s how the Volkswagen Group feels right now. A group of 10 Colorado VW, Audi and Porsche dealers are suing the state over a December vote that allowed Scout — another Volkswagen company — to sell vehicles directly to customers by granting it a dealer license. In total, there are 28 VW, Audi and Porsche dealers in the state, and additional stores could join the suit.
The lawsuit, filed in Denver District Court, alleges that Colorado’s Department of Revenue Division of Motor Vehicles incorrectly interpreted the state’s law when it found that Scout only manufactured EVs, and it downplayed Volkswagen Group’s financial backing of the brand. From Automotive News:
Scout’s dealer application and subsequent letter to the department, according to the suit, asserted that it could receive a license due to two exceptions under Colorado law: Scout had no franchised dealers of the same line-make in the state and because the manufacturer builds only electric vehicles and has no franchised dealers of the same line-make in the state.
Colorado’s Motor Vehicle Dealer Board, which includes three new-car dealers, voted 6-2 on Dec. 16 to approve Scout’s application to become a dealer in the state.
The remainder of the Motor Vehicle Dealer Board consists of three used-vehicle dealers and three members of the public.
The Colorado license was a notable victory for Scout as it pursues direct-to-consumer sales in the U.S. The vote created more consternation among dealers nationwide as the issue of direct-to-consumer sales intensified.
Along with Colorado, Scout is licensed to sell directly to customers in California, and it has gained various permits in other states. Don’t worry, it has faced challenges from salty dealers in those states, too. Usually, Scout or Volkswagen of America are the ones being sued, but that’s not the case here.
“This is a judicial review process of agency action,” Sox told Automotive News. “This is a little different than like what we’ve done in Florida or what California has done where you end up in federal court, Scout is the defendant and you’re saying, ‘Hey, they’re violating the law by what they’re doing.'”
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A spokesperson for the Colorado Department of Revenue’s Specialized Business Group, which includes the board, said the department does not comment on pending litigation.
Scout’s decision to sell an extended-range electric vehicle energy system alongside a full electric version of the Traveler SUV and Terra pickup is at the center of the lawsuit.
The lawsuit refers to Scout’s extended-range system as a plug-in hybrid system and therefore claims that the brand does not qualify for exceptions in Colorado law which are meant for EV-only brands such as Rivian and Lucid.
The lawsuit goes on to allege that Scout’s connection to Volkswagen Group makes it no different than Audi, Porsche or VW in Colorado, and those three brands are prohibited from owning, operating or controlling a dealership.
While I get why these dealers are miffed at the state and Volkswagen Group, perhaps if dealerships hadn’t created such a terrible image for themselves over the past decades, this wouldn’t be an issue.
