Summary
- Volkswagen Group’s Scout Motors plans to sell its EVs through a combination of online sales and brand stores
- Scout Motors aims to provide a direct sales model for reservations, transactions, and warranty service
- The National Automobile Dealers Association plans to challenge Scout Motors’ dealer-free approach in court
- Scout Motors cites customer dissatisfaction with traditional dealerships as a reason for choosing a direct sales model
- Scout Motors plans to have physical locations with repair bays and a mobile repair service for maintenance and customer service
Article
Introduction:
The Volkswagen Group is launching a new by-America, for-America extended range EV subsidiary called Scout Motors. A major announcement from Scout Motors is that the brand will not rely on traditional franchised dealerships to sell its off-road focused EVs. Instead, it will adopt a direct sales model similar to Tesla, Rivian, Polestar, and other electric vehicle newcomers.
Challenges with Traditional Dealerships:
Scout Motors Vice President of Growth, Cody Thacker, explained that a direct sales model offers unprecedented commercial flexibility, allowing the brand to have firsthand data to target sales, control car supplies, adjust incentives, and more. Traditional franchise laws in the U.S. guarantee independent car dealerships a stranglehold on various operations, prompting Scout Motors to take a different approach to reach customers.
Opposition from Dealerships:
The National Automobile Dealers Association (NADA) and state associations have expressed opposition to Scout Motors’ direct sales model. Similar challenges have been faced by other electric vehicle manufacturers like Lucid, Rivian, and Polestar, with ongoing legal battles against Tesla. However, Thacker emphasized the importance of full engagement from retail employees in pushing sales, highlighting the need to address common consumer pain points in the car buying process.
Consumer Pain Points:
Consumer feedback from product clinics and surveys indicated several pain points in the car buying process, including slow and cumbersome sales, lack of pricing transparency, inadequate training of sales staff, and issues with digital customer service. Thacker stated that the direct sales model allows Scout Motors to address these challenges directly, avoiding traditional obstacles in the purchasing journey.
Service and Repair Ecosystem:
One of the key challenges faced by automotive startups adopting a direct sales model is establishing a reliable service and repair ecosystem, especially for large-scale fleet-wide fixes. Scout Motors plans to overcome these challenges by establishing physical locations called Scout Studios with repair bays and implementing a mobile repair service. The brand aims to have 1,300 repair bays nationwide by 2032.
Conclusion:
Scout Motors’ decision to go without traditional franchised dealerships comes as part of an effort to address consumer pain points in the car buying process and provide a more streamlined purchasing journey. While facing opposition from established dealership networks, the brand is confident in its ability to establish a successful direct sales model and offer a unique customer service experience. By focusing on digital solutions, transparent pricing, and efficient repair services, Scout Motors aims to position itself as a leader in the electric vehicle market.
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