A group of state dealer associations is pressing Honda Motor Co. and Volkswagen Group not to sell planned electric vehicles from Scout and Sony Honda Mobility outside of the country’s franchised dealer system.
The Automotive Trade Association Executives, in perhaps the most public display of frustration yet, addressed the issue in a full-page ad in the April 15 issue of Automotive News, calling out both automakers as well as Scout, a brand formed by Volkswagen Group, and Sony Honda Mobility, a joint venture between Sony and Honda that is developing electric vehicles under the Afeela brand.
Scout plans to start production of an electric body-on-frame utility vehicle and pickup in 2026. Afeela will start production of a sedan in 2025 with U.S. sales starting in 2026.
Selling vehicles direct to consumers has been a pain point for franchised dealers since Tesla disrupted the legacy model. EV makers Rivian and Lucid have followed suit. All three have faced fierce opposition from dealer trade groups and state legislators.
When Sony Honda Mobility launched, company officials said it would not necessarily use the established Honda dealer network to sell EVs and that it planned a direct and ongoing connection with customers.
Volkswagen and Scout have not shared details of Scout’s retail plan, but back in May 2022, not long after Scout was introduced, VW of America sales and marketing head Andrew Savvas sent a letter to its dealer network confirming that Scout was an independent brand within the VW group and that VW’s U.S. dealers will have no claim on Scout products.
Dealers are concerned that Scout and Sony Honda Mobility will sell vehicles either directly to consumers or adopt an agency model in which dealerships receive a fee for facilitating the sale of a new vehicle by the manufacturer.
The ad, supported by 50 states and 21 metro associations, points out what it believes are the benefits of the franchise model and warns 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 suggests dealers are willing to pursue legal channels if Scout and Afleela attempt to sell directly to U.S. consumers.
“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,” the ad reads.
The ad comes after dealers, state dealer associations and the National Automobile Dealers Association have heard no details on Scout and Sony Honda Mobility’s distribution plans, even after multiple inquiries, said John Devlin, the Automotive Trade Association Executives’ 2024 chairman and CEO of the Pennsylvania Automotive Association.
“After two years of asking and getting nothing, frustration is very high,” Devlin said.
“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.”
The ad was the first major public action by the Automotive Trade Association Executives on the topic, Devlin said. Discussions on how the group wanted to address its concerns began in the fall, he said.
“We think this is going down the wrong road,” Devlin said. “I hope that there’s good news at the end of this, but we wanted to proactively get out ahead of it.”
Devlin said he was unaware if either brand has been in contact with any dealer association since the publication of the ad.
“I’m certainly hoping it’s not the end of this discussion,” he said. “I know it’s not. I just don’t know exactly what’s going to happen next.”
Scout Motors CEO Scott Keogh has repeatedly declined to say how the brand plans to sell and service its pickup and SUV once production begins in late 2026. Scout plans to unveil the vehicles in the third quarter.
“There’s a lot of dynamics in the marketplace,” Keogh told journalists at the February groundbreaking of the Scout Motors Production Center in Blythewood, S.C.
“We want to do the right thing for Scout, the right thing for our customers,” he said.
A Scout spokesperson said the brand did not have a statement in response to the ad.
“Our future customers are at the heart of every decision we make as we work to build our production center and design, engineer and ultimately manufacture and sell great vehicles,” the Scout spokesperson said. “The automotive industry is constantly changing, so we’re taking our time to very deliberately envision the right customer journey.”
In addition to Scout, Volkswagen Group’s Cupra brand last month said it is moving forward with plans to expand into the U.S. by the end of the decade with two electric crossovers. It will aim to utilize the group’s North American manufacturing footprint for output. Cupra will also adopt a new distribution model in the U.S., Seat and Cupra CEO Wayne Griffiths said, without going into more detail.
Sony Honda Mobility has shown the first Afeela prototype. It’s an unnamed high-tech, software-defined EV with innovative safety, infotainment and convenience features.
In February, the Nikkei business daily reported Sony Honda Mobility will roll out an SUV in 2027 and a compact vehicle in 2028 or later.
A representative for Sony Honda Mobility did not respond to a request to comment.
Reuters contributed to this report.
Editor’s note: An earlier version of this story misstated Geoffrey Pohanka’s role with the National Automobile Dealers Association.