Scout Motors, a revived brand under the Volkswagen Group, is charting a unique course in the automotive industry. Unlike traditional manufacturers, Scout plans to sell its electric vehicles (EVs) and electric range-extended vehicles (EREVs) directly to consumers, bypassing the conventional car dealership model. This strategy, similar to that adopted by Tesla and Rivian, aims to give Scout greater control over the customer experience and brand representation. The Scout Terra, showcased at IAA Munich, exemplifies the brand’s focus on the American market, emphasizing size and capability. This move, however, has not been without its challenges, as it has drawn legal challenges from established car dealerships.
Scout Motors’ decision to embrace a direct sales model reflects a broader trend among emerging EV brands. According to Scout CEO Scott Keogh, this approach aligns with how 21st-century brands operate, allowing for a more integrated and controlled brand experience. Keogh likened the experience to purchasing a phone from Apple rather than a third-party retailer like Best Buy. By creating their own stores and managing the sales process, Scout aims to deliver a consistent and high-quality customer journey. This strategy is particularly important for EVs, where consumer education and a seamless transition to new technology are critical. The direct sales model also allows Scout to gather valuable customer data and feedback, which can be used to improve its products and services.
The direct sales model adopted by Scout Motors has faced significant pushback from traditional car dealerships. In the United States, franchise laws often require manufacturers to sell through dealerships, a system designed to protect local businesses and ensure fair competition. However, these laws can also hinder innovation and limit consumer choice. Groups of Volkswagen and Audi dealers have filed lawsuits in states like Florida and California, alleging that Scout’s direct sales approach violates existing franchise agreements. These legal challenges highlight the tension between established business practices and the evolving landscape of the automotive industry. Despite these hurdles, Scott Keogh remains confident that Scout will prevail, emphasizing the importance of competition, innovation, and consumer satisfaction.
For Scout Motors, owning the customer relationship is paramount. Scott Keogh argues that direct access to customers provides invaluable data and insights, enabling the company to optimize its operations and enhance the overall customer experience. This direct line of communication allows Scout to understand customer preferences, address concerns promptly, and build brand loyalty. Moreover, Keogh pointed out that managing trade-ins directly can be a significant source of profit for the brand. In contrast, relying on dealerships means relinquishing control over these critical aspects of the business. As Keogh succinctly put it, “If you don’t own the relationship to the customer, what exactly do you have?” This philosophy underscores Scout’s commitment to a customer-centric approach that prioritizes direct engagement and data-driven decision-making.
