Time continues to be a flat circle, and what has happened before is happening again. Nearly two decades ago, dealers took to the courts and to legislatures to stop Tesla from selling its cars directly to consumers. The dealers lost, and badly, paving the way for various other independent automotive startups to try the same thing.
Independence. That’s a thinker. I’ve been knee-deep in Revolutionary War history lately, and the common theme is that while everyone cares about “liberty,” many disagree about who can apply for its graces. This is at the center of a lawsuit from dealers against EV truck startup Scout, which, if you ask the dealers, isn’t independent.
The Morning Dump has been a little heavy and political, as well as curiously Canadian, lately. Up next are a pair of stories that are both. First, not everyone in Canada loves the idea of accepting Chinese cars. The other one is a conspiracy theory about Jeep that’s pretty hilarious.
To cut some of the heaviness, I’ll share a pair of fantastic Alpines.
The Dealers Aren’t Backing Down This Time
David went to the big Scout reveal way back in 2024, and this slide from a presentation amuses me for many reasons, but let me have David explain it:
Scout said that, when it comes to launching a new brand and network, you need full engagement and enthusiasm. Apparently, there’s not enough of that going around, because — per this slide below — 81 percent of dealers don’t have EVs for sale and 50 percent of those said “they wouldn’t sell EVs regardless of inventory availability.”
[…]
The next point Scout made was that dealerships have broken consumers’ trust. “Only 8 percent of consumers say they have high or very high trust in car dealers,” Thacker said, pointing to tens of thousands of FTC complaints.
Yeah, so, the funny thing about this is that Scout Motors is wholly owned by Volkswagen Group. And Volkswagen Group has a lot of dealers. I think I overuse this, but:
The difference? Volkswagen claims that Scout Motors is an entirely independent organization, run by an entirely independent CEO, Scott Keogh. If you forgot, Keogh was previously the CEO of Volkswagen of America. [Ed note: Pretty much everyone at the press event had a thick German accent. Scout feels to me like VW trying to rebrand what has been a rather pathetic decade in the U.S. -DT].
Normally, this wouldn’t matter, but this independence is kind of the whole argument VW is using for why it doesn’t have to abide by all the franchise agreements it’s made with its dealers. Dealers who were given a bunch of electric cars by Volkswagen Group to try to sell. Electric cars that have mostly failed to find an audience. I don’t know that the Scout duo of a truck and SUV that can be had as an EREV or pure EV is going to be a winner, either, but if any automaker can create a new brand and call it “independent,” the whole concept of a franchise agreement goes out the window.
A Colorado board recently approved Scout’s license to sell cars over the objection of dealers, and now those dealers are suing. As Automotive News points out, the principle here is important if you’re a dealer:
“Scout is so closely tied with Porsche, VWoA, and AoA, that it is their alter-ego, through Volkswagen AG’s control of each entity,” the lawsuit said. “The Department, in making its licensing determination, should have determined that Scout, Porsche, VWoA, and AoA were the same entity for purposes of determining whether Scout has no franchised dealers of the same line-make in Colorado.”
Scout’s dealer license will adversely impact Porsche, VW and Audi franchised dealerships in Colorado, the lawsuit alleges.
“If this type of arrangement is valid under Colorado law, there is no mechanism to prevent other manufactures such as General Motors or Ford from setting up alter-ego companies to sell directly to consumers and compete with their franchised dealers,” the lawsuit said.
If the dealers are successful, then this could present an existential challenge for Scout, which clearly doesn’t want dealers. If Scout is successful, the inverse is true. Either way, dealer groups aren’t going down without a fight.
The Canadians Are Looking For A Donnybrook, But Not With Chinese Carmakers
Canadian Prime Minister Mark Carney gave a defiant speech at the World Economic Forum in Davos, criticizing the state of modern geopolitics:
Today, I’ll talk about the rupture in the world order, the end of a nice story and the beginning of a brutal reality where geopolitics among the great powers is not subject to any constraints.
But I also submit to you that other countries, particularly middle powers like Canada, are not powerless. They have the capacity to build a new order that embodies our values, like respect for human rights, sustainable development, solidarity, sovereignty and territorial integrity of states.
The power of the less powerful begins with honesty.
What can middle powers do? Per Carney:
Middle powers must act together because if we’re not at the table, we’re on the menu.
But I’d also say that great powers can afford, for now, to go it alone. They have the market size, the military capacity and the leverage to dictate terms. Middle powers do not. But when we only negotiate bilaterally with a hegemon, we negotiate from weakness. We accept what’s offered. We compete with each other to be the most accommodating.
This is not sovereignty. It’s the performance of sovereignty while accepting subordination.
In a world of great power rivalry, the countries in between have a choice: compete with each other for favour or to combine to create a third path with impact.
This “principled pragmatism” is going to be difficult to pull off, but there are signs that middle powers can work together to achieve something. Tuesday, everyone was worried that the United States would create a new trade war in an effort to attain Greenland. After meeting with European Middle Powers, the United States reportedly changed its mind.
I doubt this will alter Canada’s view of the world, or lead it to reverse its decision to make a bilateral deal with China. It would be a mistake, though, to state that this is the view of everyone in Canada. Ontario Premier Doug Ford doesn’t want Chinese EVs, which makes sense since so much of Canada’s auto industry is in Ontario.
Here’s his view, according to Bloomberg:
Ford, flanked by representatives of automakers and factory workers, urged Canadians not to buy cars from China — even if they’re cheaper than domestically made ones — because they come at the cost of local jobs.
“Boycott the Chinese EV vehicles,” he said Wednesday. “Support companies that are building vehicles here. It’s as simple as that.”
It sounds like Canada is going to draft a plan to encourage domestic production of Chinese vehicles, but Ford isn’t here for that either:
“Even if they do start assembling, how about the supply chain? They come and they assemble, but they bring all Chinese parts in. That means nothing. We want to make sure we produce Canadian cars by Canadians,” Ford said.
Given that the United States is trying to discourage Canadian car production from its own automakers, that’s a more difficult prospect than it used to be.
Jeep Caught Up In Heated Debate
Canada’s Heated Rivalry is not a car show, per se, though its characters are young professional athletes, and young professional athletes often love cars.
As Alanis pointed out in her write-up on the cars, there was a Jeep in the book, but not in the show:
In the book, Hollander drives a Jeep Cherokee. In the show, he’s in a Land Rover LR2.
Rozanov often calls Hollander boring as a term of endearment, because Rozanov’s family life has been far from boring (in a bad way). Rozanov says Hollander “drives a terrible car,” and in the book, Hollander responds: “What’s wrong with a Cherokee? It’s good in the snow. It holds lots of stuff. It’s a good car.”
I didn’t think anything of this beyond what Alanis wrote. I still haven’t seen the show, even though Jacob Tierney is my favorite TV director (I’m getting to it!). I made no assumptions about the swap.
Other people did, according to Automotive News in its story about the “conspiracy theory” about it among show fans:
“Jeep didn’t want to be involved in the show or wouldn’t let them use the name,” podcast host Shawn DePaz said on an episode about the show. “Instead, they took a shot at Jeep.”
One poster on Reddit declared that writer and director Jacob Tierney “said Jeep did not want to be a part of the show.” Tierney created the show for Crave, a Canadian streaming service, while Americans can watch on HBO Max.
“Jeep didn’t want to be associated with a gay hockey show,” asserted another commenter.
Given the shape Jeep is in currently, that doesn’t sound right to me. Plus, Jeep itself has been a part of Pride events in the past, so it seems like an unfair critique without more information. The Bud Light of it all aside, the brand needs all the customers it can get at the moment. AN did a good job and actually asked Stellantis:
“We’ve gone back to review your question and it appears a product placement opportunity for ‘Heated Rivalry’ was never officially presented to our team,” said Diane Morgan, who leads the company’s branded entertainment team.
The other two shows Tierney directed and produced feature hockey players who drive Jeep Wranglers, so it’s weird that there wasn’t a Jeep this time. It’s bad luck for Stellantis to get caught in a culture war it wasn’t trying to fight.
Ohhhh… Alpines
My tastes in classics often tend European, which is why the Retromobile classic car show produces so many vehicles I’d like to buy. This year looks no different, giving the trio of cars from Alpine:
- Classic Alpine A110 1600 SX; this special and unique model was the last Alpine A110 from the first generation produced in the Dieppe plant in 1977.
- Rally version of the Berlinette: a car entered in the 1975 World Rally Championship with a livery from the 1975 Tour de Corse.
- The most exclusive and extreme A110 ever created, the A110R Ultime is joining the two classic Alpine A110s in its sold-out livery: La Bleue.
Which one would I want? Yes.
What I’m Listening To While Writing TMD
“I Won’t Back Down” by Tom Petty and The Heartbreakers may feel politically pointed today, but mostly I just miss Tom Petty. Also, check out the great cameo.
The Big Question
Is Scout an independent automaker?
Top photo: Scout; Emich Volkswagen
I’m not sure they are fully independent but they aren’t the brand the dealers are representing. That would be a mess anyway to see who gets it and seeing the tantrums already i bet lots of frivolous lawsuits againt multiple parties. I would let the ih truck and tractor dealers have first dibs on servicing just because they threw a tantrum. Then maybe do some kind of merit based system if a dealer has good ratings. It’s a new brand they can’t be tarnished by bad behavior of already established dealers. All the manufacturers need to put the fear of God in their dealers. They are the face of the brand and the easiest way for someone to write off a brand and tell everyone they know it was a terrible experience and vehicle. People will stear clear. Good will is expensive to buy and cheap to loose.
middle powers
bargaining
collectively?
I wonder if the International Harvester tractor and farm implement dealers have any skin in this game. Maybe the VW dealerships aren’t even first in line for calling dibs here.
I remember there was some technicality about how automakers were structured being different between VW and someone like GM. This was when they were able to apply the tax credits but only to the first 200,000 EVs produced. VW was somehow able to get a seperate 200k cap for each of its brands but the cap applied to all of the GM brands and it was something to do with the corporate structure,but I don’t know enough to remember what the specifics were. I’d imagine the same concept is going to apply to Scout and their dealership argument.
The (modern) Alpine A110 is what I’d buy if I moved to Europe.
No, Scout is as independent as Saturn Corporation ever was, it is a huge reach for Volkswagen to claim otherwise. That said, I hope VW pulls off a win anyway, sometimes you don’t have to be right to be right, if you know what I mean
Let me stop you right there. It’s a cold, cold day in hell before you can overuse ITYSL clips/screenshots.
I was recently in a meeting and the customer asked us to go over time. Our VP on the call said, “I don’t think we should skip lunch.” So obviously I sent a gif of “You can’t skip lunch!” to the internal team. No one responded. 🙁
God I hope you didn’t choke on a hot dog or anything.
Gotta make sure you have your Carber Hot Dog Vac at the ready.
The whole dealership model exists because, 100+ years ago, Henry Ford and his cronies didn’t want to be in the business of operating 500 stores strewn across the country. I don’t think Mary Barry and Jim Farley want to be in that business today, either.
Independent dealership meant that automakers could expand their sales networks quickly and without spending their own money.
And nowadays, few automakers want the add the massive physical and payroll overhead of a nationwide sales network
I think the claim is that with modern online sales, you don’t really need a complex network of stores.
I understand this. Sounds like a business decision by the vehicle manufacturer.
But, why is it REQUIRED for all vehicles to be sold this way? That is more about dealers than mfrs, IMO.
FWIW The cars in Letterkenny have the branding covered to avoid the product placement stuff. My guess was the show runners only cared about needing an SUV and didn’t really care if it was a Cherokee or similar.
As I pointed out on Ye Olde German Lighting Site, unless CARB’s definition has changed, Scout’s series hybrid model’s gas-extended range is too large to qualify as an EREV.
Am I missing something, or is this a net benefit for consumers? What exactly do dealers provide that even remotely benefits us? There’s a reason everyone hates dealers, and if they need to use strong political lobbies to simply exist, I think it’s high time to start asking questions. Furthermore, I have serious doubts that their arguments hold any water. Do BMW dealers have some sort of divine right to sell Rolls-Royces because BMW owns Rolls? Also, Scout is clearly a different brand from VW; this isn’t some Pontiac/Chevy/Buick badge engineering job.
It’s not so straight forward.
The difference between invoice and MSRP of a car is meant to cover operating expenses for the dealership. Property, employees, liability, utilities, et cetera. Nowadays, dealers don’t profit much on the sale price, they make most of their money from the service and financing departments.
Any auto manufacturer that wants to start selling its own cars would then need to:
Build and then maintain a network of showrooms so that people can see and test drive vehicles.Employ sales staff to take people on those test drives and go through the options, even if they are just using the automaker’s online configuratorEmploy financing departments. After all, why let banks and credit unions get all those sweet, sweet interest payments?Either build out service departments, or contract with a network of independent service providers to perform recall workWhere, in all of this, does the consumer get to see savings?
As long as the OEMs don’t play the same games as dealers, not forcing any of the nonsense add-ons would be savings. Also, I would imagine a significant saving of time, energy, and stress from transparent pricing and transactions.
You’re making a lot of assumptions that I don’t think are justified.
The OEMs will want to optimize profits, just as dealers do. The difference is if Ford Dealer A is being difficult, I can go buy from Ford Dealer B or C a few miles away, or leverage them against each other. Once my only point of negotiation is with Ford itself, those options are gone. The pricing is presumably take it or leave it.
But here’s the thing: aside from “customer satisfaction”, why would automakers NOT maximize profit by with “mandatory” add-ons?
I think the direct sales model is trying to do what Amazon did to retail – consumers read reviews online until they find a product they think matches their needs and they order it. It shows up a few days later, and if there’s a problem or it doesn’t fit, they just send it back.
This is nonsense when talking about shipping cars, of course, but it doesn’t stop executives from pitching the future of car-buying as one where customers never even lay eyes on a car before buying it.
This isn’t to defend dealerships in any way, but I think this is the “future” certain auto execs and would-be buyers are envisioning, not the version where OEMs have to spin up their own sales, service, and financing departments.