VW’s US Dealers Sue Over Plan to Leave Them Out of Scout Sales

Volkswagen AG is being sued by two U.S. dealerships who are challenging a plan to sell Scout Motors vehicles directly to consumers, bypassing their showrooms.

The plan is an alleged deliberate breach of contract, according to a class-action complaint from two dealers filed in a U.S. district court in Virginia on Tuesday. The revived Scout brand plans to start production of trucks and SUVs next year and has opened online reservations for a $100 fee.

The filing notes reservations have surged to more than 150,000. Upcoming models include the Terra pickup truck and the Traveler sport utility vehicle, which VW is offering as fully electric versions and the more popular gasoline-electric hybrids.

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VW dealerships are “being deprived of their right and ability to sell these cutting-edge vehicles, at significant financial cost to the dealers,” the complaint said. The automaker declined to comment.

US dealers have vied to sell vehicles from VW’s rugged new brand since they were unveiled in 2024, and resentment has only grown as demand for Audi and VW brand models slumped in recent months. Volkswagen has abandoned a goal to grow US market share to 10%, Chief Executive Officer Oliver Blume told German newspaper Handelsblatt in January.

VW, which has an around 4% share in the US, has long struggled in the world’s second-biggest car market. Latest efforts to boost sales have been held back amid tariffs and a lineup lacking the larger SUVs and pick-ups that consumers demand.

VW acquired Scout Motors as part of its 2021 purchase of truckmaker Navistar, the successor company to the brand’s original parent International Harvester. Plans for the revival of the retro brand include a $2 billion plant in South Carolina that’s currently under construction. Once on the road, VW hopes the vehicles will inspire buyers similarly to Ford Motor Co.’s successful resurrection of the Bronco SUV.

VW’s direct sales plan violates contractual and state statutory protections, the dealers alleged. Under its standard agreements, Volkswagen is required to sell and deliver authorized products exclusively through its franchised dealers.

“We’ve asked for a truck for forever, particularly something rugged, offroad — exactly what they’re gonna deliver here,” Volkswagen National Dealer Council chairman Fred Emich said late last year. “It’s really just a punch in the face.”

The lawsuit seeks damages and injunctive relief to stop what the dealers describe as an unlawful direct-to-consumer distribution model.

Top photo: A Scout Motors Terra pickup truck at the IAA Mobility expo in Munich on Sept. 7. Bloomberg.