In today’s episode of Inside Automotive, Michael Wood, the General Manager of Jaguar, Land Rover, and Volkswagen divisions at Checkered Flag Auto Group, shares his unique perspective on Scout Motors’ decision to bypass Volkswagen stores and sell vehicles directly to consumers, a move that has raised concerns among car dealers nationwide.
Scout Motors’ direct-to-consumer model, in line with the strategies of brands like Tesla, Lucid, and Rivian, has the potential to significantly impact the automotive industry. However, as the Volkswagen Group fully owns Scout, its sales strategy directly competes with dealerships that sell Volkswagen’s main brand and its subsidiary brands, which include Audi, Porsche, Bentley, and Lamborghini.
Dealers feel frustrated and sidelined by Volkswagen’s decision to disregard the franchise model and criticize the automaker’s disconnect from their dealer-based heritage.
However, Wood believes Volkswagen’s decision to pit Scout against its dealers will eventually lead to the brand’s demise. He predicts the brand will ultimately return to a dealer franchise model.
In addition, strict franchise laws prohibit direct-to-consumer auto sales in most states. However, if Scout can bypass the well-written ordinances, it may create a significant opportunity for a shift in the industry.
However, it’s doubtful that OEMs will move to direct-to-consumer models as substantial capital would be required to remove vehicles from dealership showrooms.
Despite the unlikely scenario of OEMs moving to a direct-to-consumer model, Wood advises leaders to implement change proactively in their dealerships. Acknowledge that this isn’t a threat but an opportunity to drive sales and build high-performing teams.
The best way dealerships can combat Scout’s direct-to-consumer sales model is to elevate their customer experience and secure customer loyalty. This is a powerful tool that puts the control back in the hands of the dealerships.
Dealership teams have significant influence over a customer’s experience. Providing customers with a world-class experience and superb customer care can never be imitated with an online transaction. This unique value should reassure dealership leaders of their importance in the industry.
“We need to stop imitating what’s always been done and start innovating the way that the consumer wants to transact.” - Michael Wood
