Volkswagen Group's announcement this month that it would create an electric vehicle brand in the U.S. based on a modern interpretation of the long-dormant International Harvester Scout was silent on one vital detail: how the Scout SUV and pickup would be retailed.
For the sake of VW's lofty ambitions of achieving 10 percent U.S. market share across its brands, we hope CEO Herbert Diess and other executives would not be so foolhardy as to try to sell these vehicles directly to U.S. consumers. That would be a colossal error in judgment — one that might not only hamper the Scout brand's potential viability, but could damage the automaker's other brands by further antagonizing its U.S. dealers.
It is one thing for a true EV startup — Tesla, Rivian, Lucid, et al. — to be attracted to a direct-sales model. Under such a model, the manufacturer doesn't have to share profits with franchised retailers, allowing its books to look better to investors — at least until it has a significant number of vehicles on the road and something goes wrong. As Tesla is learning, direct sales ultimately hits a wall at scale when consumers feel so abandoned by a lack of attention that they are forced to reach out to the CEO on Twitter with complaints and concerns.
But what's good for a startup doesn't necessarily work for a legacy automaker. If VW Group decided to box out its U.S. franchisees now, using products they have long argued for, it would be a slap in the face that warrants a defensive reaction from dealers.