Car dealers are terrified of direct sales. They see protecting the franchise sales model as paramount. I mean, how else are they going to charge for crap you don’t need and try to force you into financing their bonuses plus the price of the car for 84 months? Skipping the middle man is such a threat to their bottom line they even get concerned about how cars that don’t even exist yet are going to be sold.
Automotive News reports that Automotive Trade Association Executives took out a full page ad in the April 15 edition of Automotive News. The ad calls for both Sony Honda Mobility and VW to not sell the upcoming Afeela and Scout EVs outside of the established dealer franchise system.
The ad, which Auto News says is supported by franchise associations in all 50 states and 21 smaller metro associations, comes across as a warning. The group reiterates that “state laws prohibit companies directly or indirectly affiliated with an established manufacturer from selling new vehicles without the use of dealers across most of the country. It even goes on to make a case for the franchise sales model before threatening legal action if Sony and VW don’t play ball. “To avoid potential legal challenges across the nation and ensure full compliance with applicable laws and regulations, the surest path to sales success is through franchised dealers.”
Dealers and the National Automobile Dealers Association have been worried about how the EVs are going to be sold after what they say has been two years of no details on how the sales process will go down. Mind you, VW isn’t planning to start production of the Scout until 2026 while Sony’s Afeela EV starts production next year before going on sale in 2026. The dealers are literally worried about nothing.
“After two years of asking and getting nothing, frustration is very high,” said said John Devlin, the Automotive Trade Association Executives’ 2024 chairman and CEO of the Pennsylvania Automotive Association.
“If they want to sell the vehicles direct, it’s going to be an incredibly difficult battle,” he said.
Geoffrey Pohanka, chairman of Pohanka Automotive Group in Capitol Heights, Md., and 2023 chairman of the National Automobile Dealers Association, told Automotive News early this year that if Afeela and Scout circumvent franchised dealers, they would be challenged by state and metro trade associations with NADA support.
“Silence speaks,” said Pohanka, whose group includes multiple Honda and VW stores. “The fact they haven’t announced that they will go through dealers indicates they may not.”
Neither Sony or VW commented on the situation. The only details that even hinted about how VW plans to sell the Scout was a letter sent by VW of America sales and marketing head Andrew Savvas to dealers in late 2022. In it, he tells them that Scout is it’s own brand and that VW dealers will have no say on anything concerning its products.