Law states that manufacturers may not compete with their own franchisees by using affiliates to directly sell or service vehicles
Sacramento, Calif.—The California New Car Dealers Association (CNCDA) recently issued a cease-and-desist letter to Volkswagen (VW) and its affiliate Scout following their recent announcement that they plan to sell vehicles under the Scout brand to California consumers in direct violation of state law.
CNCDA’s cease-and-desist letter details VW’s ongoing violations of California Vehicle Code section 11713.3(o). Scout is a VW affiliate under California’s Vehicle Code. California law states that manufacturers may not compete with their own franchisees by using affiliates to directly sell or service vehicles. CNCDA states that the intention of VW and Scout.
CNCDA added that VW’s illegal direct sales plans disregard the legal framework that protects consumer choice and competition within California’s automotive marketplace. VW’s sales of Scout-branded vehicles without participation from franchised dealer partners circumvent its legal obligation to ensure accountability, fair pricing, and consistent customer service.
“Volkswagen’s direct sales via its Scout brand represent a direct threat to the jobs, investments, and consumer protections California’s franchise laws are designed to safeguard,” said CNCDA President Brian Maas. “We strongly encourage Volkswagen to heed our call to abide by California law and immediately stop offering Scout vehicles directly to consumers without using their business partner local dealers.
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