CNCDA Files Lawsuit Against Volkswagen and Scout Motors for Violation of California Franchise Laws
Contact: Autumn Heacox, Director of Communications & Marketing: aheacox@cncda.org, (916) 441-2599 x105
Scout Motors Bypassing Dealer Partners
SACRAMENTO, CA, April 22, 2025— Today, the California New Car Dealers Association (CNCDA) filed a lawsuit in San Diego County Superior Court against Volkswagen and its affiliate, Scout Motors, for deliberately violating California’s franchise laws. The lawsuit asserts that Volkswagen is illegally competing with its dealer partners through its affiliate, Scout Motors.
Volkswagen and Scout Motors are operating in direct violation of California Assembly Bill 473, a 2023 law that prohibits automakers from using affiliated brands to compete with their own franchised dealers. Despite admitting to legislative leaders that AB 473 would cut off its ability to sell directly to consumers, Volkswagen, via Scout Motors, has taken deposits and is marketing Scout-branded vehicles to California consumers.
“While CNCDA represents 45 Volkswagen dealerships in California, this lawsuit sends a message to every automaker,” said Brian Maas, CNCDA President. “VW dealers would welcome the opportunity to sell Scout trucks and SUVs, but their manufacturer business partner is denying them that opportunity, in direct violation of California law. Volkswagen can’t pick and choose which vehicles to sell on its own or through its franchised dealer network, reserving the most profitable or desirable vehicles for itself. Illegal competition will harm not only dealers but also the communities and car buyers that they serve. That is why the Legislature unanimously approved this important law.”
The lawsuit alleges unfair competition and false advertising, and CNCDA is seeking to immediately stop Scout Motors’ illegal direct sales, as well as civil penalties that could exceed $35 million.
California’s franchised dealers are key economic drivers, employing over 135,000 Californians and generating more than $8 billion in tax revenue for state and local governments. They also donated almost $71 million to charitable organizations in 2024 alone. CNCDA is committed to protecting the laws that ensure fair competition and a level playing field for all.
The filed complaint can be read here.
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About CNCDA
For over 100 years, the California New Car Dealers Association has represented California’s franchised new car and truck dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles and provide automotive products, parts, services, and repairs.
In 2024, California’s franchised new car dealers sold more than 1.85 million new and used cars and trucks, employed more than 138,478 people, paid $8.83 billion in sales tax, and donated $70.75 million to charitable and civic organizations. CNCDA is the Nation’s largest state association of franchised automotive dealers, with nearly 1,200 members, and provides legal compliance and legislative, regulatory, and legal advocacy.