Bellavia on Scout Lawsuit, Van Ryn on Training, Lange on Fleet | Daily Dealer Live
About this episode
The episode dives into a landmark lawsuit filed by Volkswagen dealers against Volkswagen's new Scout brand, which sells vehicles directly to consumers, bypassing traditional dealerships. Attorney Leonard Belavia explains how this challenge could reshape the franchise system and dealer relationships nationwide. The discussion also covers rising fraud risks in auto financing, supply chain issues with parts suppliers, and evolving trade policies affecting vehicle imports. The episode highlights the tension between direct-to-consumer sales models and the established dealer network, exploring potential impacts on service, sales, and industry structure.
direct-to-consumer sales
"...Volkswagen over its new Scout brand selling vehicles directly to consumers filed yesterday bypassing the existing dealer network entirely. Dealers claim Volkswagen created Scout as a workaround of franchise law and if they win, if Scout wins, if Volkswagen wins, it could open the door for every OEM to launch new brands and to sell direct."
Direct-to-consumer sales mean the car company sells cars straight to people, without going through car dealerships. This can change how people buy cars.
Direct-to-consumer sales refer to manufacturers selling vehicles directly to buyers without using traditional dealerships. This approach can disrupt existing franchise laws and dealer networks, affecting how cars are marketed and sold.
franchise law
"Dealers claim Volkswagen created Scout as a workaround of franchise law and if they win, if Scout wins, if Volkswagen wins, it could open the door for every OEM to launch new brands and to sell direct."
Franchise laws are rules that say car companies usually have to sell their cars through special dealers, not directly to people. These rules help protect the dealers' businesses.
Franchise laws regulate the relationship between car manufacturers and their authorized dealerships, often restricting manufacturers from selling vehicles directly to consumers. These laws aim to protect dealer investments and maintain fair competition.
OEM
"...it could open the door for every OEM to launch new brands and to sell direct. Think about that."
OEM means the car company that makes the cars, like Volkswagen or Ford.
OEM stands for Original Equipment Manufacturer, referring to the car companies that design and build vehicles, such as Volkswagen, Ford, or Toyota.
F&I
"brand and suddenly dealers are cut out of the transaction. No sales gross, no F&I, no trade ins, no service relationship. Well today we're talking to the attorney leading the charge against Volkswagen and we're talking and we're asking the real question dealers need to understand. ... And as a reminder to you, our daily dealer listening audience, we are streaming across all CDG social media platforms. Post your comments in, tell us what you think about this suit, tell us what you think about the things that we bring up today on today's show."
F&I means the part of a car dealership that helps you get a loan and sells extra protections for your car. This part helps the dealer make money beyond just selling the car.
F&I stands for Finance and Insurance, a department within car dealerships responsible for arranging financing, selling extended warranties, and other insurance products. It is a significant profit center for dealerships.
trade ins
"brand and suddenly dealers are cut out of the transaction. No sales gross, no F&I, no trade ins, no service relationship. Well today we're talking to the attorney leading the charge against Volkswagen"
A trade-in is when you give your old car to the dealer to help pay for a new car. The dealer then sells your old car to someone else.
Trade-ins refer to the process where a customer exchanges their current vehicle as partial payment towards the purchase of a new vehicle. This is a common practice in dealership sales.
franchise system
"Well today we're talking to the attorney leading the charge against Volkswagen and we're talking and we're asking the real question dealers need to understand. Is this the beginning of the end of the franchise system or is it the moment dealers push back?"
The franchise system means car companies let local dealers sell and fix their cars. These dealers do things like selling cars, helping with loans, taking old cars in trade, and fixing cars.
The franchise system is the traditional dealership model where manufacturers authorize independent dealers to sell and service their vehicles. This system involves dealers handling sales, financing, trade-ins, and service relationships with customers.
authorized dealer network
"At the heart of it, plaintiffs allege that Volkswagen has a contractual obligation to sell vehicles through its authorized dealer network and that Scouts direct to consumer model, well, it violates that agreement."
Authorized dealer network means the official car dealers that the car company trusts to sell and fix their cars.
An authorized dealer network is a group of dealerships officially approved by a car manufacturer to sell and service its vehicles.
reservation fees
"Scout has already collected an estimated $15 million in reservation fees from roughly 150,000 customers and they all bypass the dealer network entirely."
Reservation fees are money you pay to hold a spot to buy a car before it is ready.
Reservation fees are payments made by customers to secure a place in line for a vehicle before it is available for delivery or purchase.
USMCA
"This comes as USMCA review talks heat up and US Canada trade tensions remain elevated. Still, for dealers, tighter import rules could mean more volatility and model mix..."
USMCA is a trade agreement between the US, Canada, and Mexico that sets rules for buying and selling cars and other goods between these countries.
USMCA stands for the United States-Mexico-Canada Agreement, a trade deal that replaced NAFTA. It governs trade rules between these countries, affecting automotive manufacturing, tariffs, and cross-border vehicle sales.
Volkswagen Did Volkswagen
"... this news of your lawsuit. Let's start bulletly. Did Volkswagen intentionally try to bypass the dealer network w..."
The Volkswagen ID. Buzz is a new electric van that looks like the old VW bus. It runs on electricity instead of gas and is part of Volkswagen’s plan to make more electric cars.
The Volkswagen ID. Buzz is an all-electric van inspired by the classic VW Microbus, combining retro styling with modern electric vehicle technology. It's significant as part of Volkswagen's push into electric mobility and is often discussed in the context of dealer network strategies and EV market expansion.
wholly owned subsidiary
"apparent that VW knows that the worldview Scout as a wholly owned subsidiary. I mean, when you look at... the operational control that both VW the parent and VW of America has over Scout,"
A wholly owned subsidiary is a company that is completely owned by another company. This means the bigger company controls everything the smaller one does.
A wholly owned subsidiary is a company whose entire stock is owned by another company, giving the parent company full control over its operations and decisions.
Honda
"I mean, we already know that Honda has formed a new venture with Sony. So that's probably a year or two behind this."
Honda is a company that makes cars and motorcycles and is working on new electric car projects.
Honda is a major Japanese automaker known for reliable cars, motorcycles, and recently for ventures into electric vehicle technology.
Sony
"I mean, we already know that Honda has formed a new venture with Sony. So that's probably a year or two behind this."
Sony is a company that makes electronics and is now working with Honda to make electric cars.
Sony is a major electronics company that has partnered with Honda to develop electric vehicles, combining automotive and technology expertise.
Tesla
"I mean, keep in mind, this is not Tesla. It's not Rivian. It's not Lucid. You know, that's a totally different model because they don't have an existing network of dealers."
Tesla makes electric cars and sells them directly to customers without using regular car dealers.
Tesla is a leading electric vehicle manufacturer known for its direct-to-consumer sales model without traditional dealerships.
Lucid
"I mean, keep in mind, this is not Tesla. It's not Rivian. It's not Lucid. You know, that's a totally different model because they don't have an existing network of dealers."
Lucid is a company that makes fancy electric cars and sells them directly to buyers without using normal car dealers.
Lucid Motors is an electric vehicle manufacturer known for luxury electric sedans and a direct-to-consumer sales approach.
Rivian
"I mean, keep in mind, this is not Tesla. It's not Rivian. It's not Lucid. You know, that's a totally different model because they don't have an existing network of dealers."
Rivian is a new company that makes electric trucks and sells them directly to customers, not through regular dealers.
Rivian is an electric vehicle startup focused on electric trucks and SUVs, also using a direct sales model without traditional dealerships.
distribution network
"Volkswagen, you're saying initially had a distribution network. Now they're seeking to go around it."
A distribution network is the group of car dealers and shops that help sell and fix cars for a company.
A distribution network in the automotive industry refers to the system of dealerships and intermediaries that sell and service vehicles to customers.
Ford Auto Collection
"Ford tried this in the past. In the 90s, Ford tried something called the auto collection. They bought up dealers and they tried to sell direct. It didn't succeed as my memory serves."
Ford Auto Collection was a plan by Ford in the 1990s to sell cars directly to people by owning the dealerships themselves. It didn't work out and was stopped.
The Ford Auto Collection was an initiative in the 1990s where Ford attempted to buy dealerships and sell cars directly to customers, bypassing the traditional dealer franchise system. The effort was short-lived and ultimately unsuccessful.
diesel gate scandal
"...ago that all of the most of the existing VW dealers stuck by VW when they went through the diesel gate scandal. That was a real painful period of time, not just for VW, but for VW consumers who had vehicles that they really couldn't market..."
The diesel gate scandal was when Volkswagen cheated on pollution tests for their diesel cars, which caused a big problem for the company and people who bought those cars.
The diesel gate scandal refers to Volkswagen's 2015 emissions cheating controversy where the company installed software in diesel engines to manipulate emissions tests, leading to legal and financial consequences and loss of consumer trust.
class action lawsuit
"I mean, it's a class action lawsuit by all of your dealers is a big deal. It means your network is very unhappy with you."
A class action lawsuit is when many people team up to sue a company or person because they all have the same problem with them.
A class action lawsuit is a legal case where a group of people collectively bring a claim to court against a defendant, often used when many individuals are affected by the same issue.
FNI
"It's not just the lost profit on the initial sale. It's the FNI. It's the value of having a trade in 60% of the transactions involved"
FNI means the money a car dealer makes from helping you get a loan or selling you extra insurance when you buy a car.
FNI stands for Finance and Insurance, which refers to the profit a dealership makes from financing deals and selling insurance products during a vehicle sale.
Hagen's Berman
"My co-counsel in this case is Hagen's Berman. Volkswagen knows them very well. Hagen's Berman has the record in this country of getting the highest class action recovery in the automotive industry ever."
Hagen's Berman is a law firm that helps people sue companies together. They have won big money in car-related cases.
Hagen's Berman is a prominent law firm specializing in class action lawsuits, including major cases in the automotive industry. They have a record of securing large settlements for plaintiffs.
Subaru
"she's a Subaru rally co driver with Travis Pastrana. So our automotive listeners will love that, right?"
Subaru is a car company from Japan that makes cars that can drive well on all kinds of roads, especially in races on rough terrain called rally racing.
Subaru is a Japanese automaker known for its all-wheel-drive vehicles and success in rally racing, particularly with models like the Subaru Impreza WRX.
rally
"she's a Subaru rally co driver with Travis Pastrana. So our automotive listeners will love that, right?"
Rally is a type of car race where drivers race on different kinds of roads, like dirt or snow, not just regular streets, and they have to be really good at driving in tricky places.
Rally is a form of motorsport where drivers race on closed public or private roads in various conditions, often including gravel, dirt, and snow. It emphasizes car control and navigation.
Ford Motor Company
"and then achieved President's Club Award through Ford Motor Company. It was something that the store hadn't hit in a long time."
Ford is a big car company from America that makes many types of cars and trucks. They have been around for a long time and are very well known.
Ford Motor Company is a major American automaker known for producing a wide range of vehicles including trucks, SUVs, and passenger cars. It is one of the largest and oldest automotive manufacturers in the world.
Lithia
"Was it with Lithia or was it with Suburban or was it with another auto group that they put you together to work together, father, son? Yeah, so it was actually under Lithia. So Lithia acquired two dealerships locally."
Lithia is a big company that owns many car dealerships where people buy and sell cars.
Lithia Motors is a large automotive retailer and dealership group in the United States, known for acquiring and operating multiple dealerships under various brand names.
curb appeal
"But the big thing that I changed was curb appeal, right? So, we walked in and our front row of cars were not facing the historic Woodward Avenue that we're located on."
Curb appeal means how nice and welcoming a place looks from the outside. For a car dealership, it means making sure the cars and the building look clean and inviting so people want to come in.
Curb appeal refers to the attractiveness of a property or business from the street, which can influence customer perception and foot traffic. In car dealerships, it includes how cars are displayed and the cleanliness of the lot and storefront.
reconditioning process
"And then it took a look at our reconditioning process with used cars. What's our time to market? How fast are we getting these cars priced and photoed online?"
Reconditioning means fixing up a used car so it looks nice and works well before selling it. This can include cleaning and small repairs.
The reconditioning process refers to the steps taken to prepare a used car for sale, including cleaning, repairs, and inspections to ensure the vehicle is in good condition and appealing to buyers.
commercial vehicles
"42% of your total stock is commercial vehicles. That's 4% of the market. What are you guys doing in commercial vehicles? At this location, we don't do much commercial vehicles. Again, so we have those five Ford dealerships that are local in this tri-county area that we're in. Our Sterling Heights location does take on a lot of that commercial vehicle."
Commercial vehicles are cars or trucks used by businesses to carry stuff or people for work, not just for personal use.
Commercial vehicles are vehicles primarily used for business purposes, such as transporting goods or passengers, including trucks, vans, and work vehicles.
Ford Five Ford
"...uch commercial vehicles. Again, so we have those five Ford dealerships that are local in this tri-county are..."
The Ford Five Hundred is a big car made to be comfortable and safe for families. It was made to replace an older popular car and give people a good, reliable ride.
The Ford Five Hundred was a full-size sedan produced in the mid-2000s, designed to offer a spacious and comfortable ride with a focus on safety and value. It was Ford's attempt to replace the Taurus and appeal to buyers seeking a practical family car.
Chevrolet Suburban
"...t, right? Terry Lane, assistant general manager, suburban Ford of Ferndale. Thanks for joining the show. Be..."
The Chevrolet Suburban is a big car that can carry lots of people and stuff. It's popular with families and businesses because it’s very roomy and strong.
The Chevrolet Suburban is a full-size SUV known for its spacious interior, strong towing capabilities, and long-standing presence in the American automotive market. It's often discussed due to its popularity among large families and commercial users who need ample passenger and cargo space.
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