In a critical discussion on Inside Automotive, Mike Stanton, CEO and President of NADA, and John Devlin, President of the Pennsylvania Automotive Association and the Automotive Trade Association Executives’ 2024 Chairman, address the implications of Volkswagen’s Scout Motors deciding to sell vehicles directly to consumers. This controversial move raises significant concerns for existing dealerships and the franchise model, prompting NADA and state associations to prepare for a robust response.
During the interview, Stanton emphasized that NADA is working closely with state and metro dealer associations to counter Volkswagen’s decision, which they view as a betrayal of the longstanding dealer-manufacturer relationship. He highlighted the importance of maintaining this partnership, stating, “There are over 600 VW dealers in this country… over 50,000 people in this country work for Audi, VW, and Porsche dealers.” This emphasizes the consequential economic impact these dealerships have on local communities and the automotive ecosystem as a whole.
Meanwhile, Devlin notes Volkswagen’s disappointing lack of communication, suggesting that their silence has led to this anticipated but disheartening decision. He pointed out that Volkswagen’s direct sales approach might hinder its existing U.S. dealer network, stating, “Trust is important in any relationship,” and indicated that the current environment threatens to shatter this trust.
Both leaders expressed concerns that this move could damage the consumer experience, as many direct sellers have struggled with service levels.
Nevertheless, these industry leaders also touched on the potential challenges Volkswagen might face in terms of regulatory compliance across various states. Devlin pointed out that “they can’t get licensed in most of the states, if not all the states around us,” stressing the complexity of navigating the franchise laws that protect dealerships.
“Buying a car is not like buying a tube of toothpaste on Amazon. You don’t trade in your toothpaste; you don’t finance your toothpaste. There are a lot of different aspects to this, and it’s... the franchise system is best positioned to take care of this, and that’s been proven time and time again.” — Mike Stanton.
