Scout in the Crosshairs – for the Wrong Reasons

Scout Motors – which is VW’s peripheral EV albatross – is likely to sell as many EVs as VW already hasn’t. The “market” for $60k-plus EVs such as the ones Scout plans to offer being something like the “market” for ice-making machines in Antarctica, with the difference that ice-making machines are useful in places other than Antarctica.

$60k-plus EVs not so much.

Anyhow, VW bought Scout – the rights to the name – to try to market EVs under that name. Scout wants to sell them – well, it wants to try to sell them – directly to buyers (assuming any such exist) rather than offer them through a network of dealerships. Believe it or not, it’s actually against the law for vehicle manufacturers to sell a vehicle directly to a buyer rather than through a middle man.

That is to say, a dealer.

Well, Scout just won a court case that will allow it to sell its  devices directly rather than through dealers and – not surprisingly – some dealer organizations are very upset.

Mike Maroone – who was a former AutoNation executive and who is currently the CEO of a major dealer chain – Maroone Auto – says that Scout should be barred from direct selling because it is part of the VW/Audi combine and for that reason is barred from direct selling under existing laws that forbid direct sales of vehicles. Scout argues it makes devices – electric vehicles – and these have been exempted in a number of states from the laws requiring vehicle manufacturers to sell through franchised dealerships.

Tesla, for instance, has been selling its devices directly for years in several states – because it can. Because EVs have always been treated like a Special Needs child by the government.

Because of course that’s what they are. But that is a subject for another time.

Maroone says Scout’s claim that it is a distinct entity vis-a-vis its VW (and Audi) parent is “insincere” and that it ought to be bound by VW and Audi’s agreements with its dealer networks as well as state law forbidding direct sales of vehicles.

As distinct from devices.

“If it walks like a duck and quacks like a duck, it’s a duck,” he says – and of course, he’s right. In the sense that Scout Motors is an appendage of VW/Audi and Scout is a device-maker, like Tesla. But that isn’t really the issue, aside from the legal technicalities. The issue, fundamentally, is whether any vehicle manufacturer ought to be prevented by law from selling directly to buyers. That this is a contentious issue says a great deal about the state of things in this country.

We have gotten so used to guilds and cartels – though those words aren’t used much anymore – that we no longer understand that there are guilds and cartels. The American Medical Association is one such. It is very difficult to practice medicine without AMA approval. Many other professions are hemmed in and controlled in similar fashion. It makes professions easier to control. If you want to work in certain professions you must join the guild and thus become part of the cartel, which is also a racket in that it uses the law to protect itself from the “sinful” thing – per John D. Rockefeller – called competition.

Laws that force people to deal with dealers are among the worst offenders.

Not that there is anything morally objectionable about dealers – as such. A dealership can provide services that some people want, such as having a network of support in multiple different areas; in-person help with the buying process and sales staff that is knowledgeable about a vehicle’s features, the opportunity to see new vehicles in person and to “kick the tires,” as the saying goes.

Dealers typically employ staff that prep new vehicles prior to delivery, meaning they clean the vehicle up inside and out, remove the plastic coverings used by the factory to protect the interior, etc. There is also usually a pre-delivery inspection during which the salesman and the owner go over the vehicle to satisfy that there is no damage such as paint chips/dents or something not working properly – so that it can be fixed before the new owner drives the vehicle off the lot.       

Some people also value the relationship they have with the staff at a dealership and they also like knowing they can bring their vehicle in for service to a place where they have done business and (they hope) will be treated well on account of it. 

Franchise dealers can thus compete with manufacturer/direct sales (these latter, by the way, can also provide similar services).

But note the italics.

There is no issue – morally speaking – when services are provided to those who want them. When there is competition for business. The moral affront bubbles up when certain business are protected by the government; when people are told they must pay for services they neither want nor want to pay for.  That’s what some dealers – such as Maroone – want. Scratch that. It is what some dealers such as Maroone are demanding. They want the government to force people to deal with dealers, which means to pay them for their services. This is bad enough, but it’s made worse by eliminating that dread thing – competition – by outlawing it.

If the free market is allowed to operate then buyers have the choice to buy a vehicle through a dealer and pay for the services the dealership provide which they want and – more to the point – consider to be valuable enough that they are willing to pay for them.

Technically, they pay more for the vehicle – but it amounts to the same thing. The interesting thing is they’d pay less, probably, if the dealer had to be competitive with the alternative (the direct-buy option). The axiom is: When you have to pay more, you will pay more. This is the principle the car insurance mafia bases its operations on. Car insurance would almost certainly cost most people – the people with claims-free history, at any rate – half or less what it currently does if those people had the option to not pay the insurance mafia.

The insurance mafia naturally prefers that option not be on the table; the car dealer mafia prefers the same. 

“Dealers are resilient,” says Maroone. “They’ll figure this out and continue to succeed but the traditional franchise system must be respected.”

Italics added.

He means imposed. “Respect” in this context being of a piece with the “respect my authority” – that is, obey –  refrain that is regularly emitted by armed government workers.

The good news is that the mafia lost this case.

Here’s hoping more such to come.

. . .

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