Inside Automotive with Jim Fitzpatrick, powered by CBT News

Colorado Greenlights Direct Sales For Scout

• Jim Fitzpatrick • Season 1 • Episode 53

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Colorado’s decision to grant Scout Motors a dealer license has reignited national debate over direct-to-consumer sales and the future of the franchise model. On this episode of Inside Automotive, Mike Maroone, CEO of Mike Maroone Auto and former AutoNation executive, shares his perspective on why the move represents a circumvention of long-standing franchise protections and risks destabilizing OEM–dealer relationships. Maroone challenges Scout’s claims of independence from Volkswagen, argues that bypassing dealers does not benefit consumers, and outlines the potential legal, political, and market consequences of the decision. He also discusses how Colorado’s strong EV market, shifting incentives, and growing interest in hybrids factor into the broader picture, while emphasizing the importance of dealer associations and advocacy. The conversation closes with Maroone’s outlook on acquisitions, tariffs, and why respecting the franchise system remains critical as the industry evolves.

Don't miss:

  • Scout Motors’ dealer license and franchise law implications
  • OEM–dealer relationship strain and long-term risks
  • Litigation, negotiation, and political advocacy options for dealers
  • EV demand trends, incentives, and hybrid adoption in Colorado
  • Direct-to-consumer sales and precedent-setting concerns

Inside Automotive with Jim Fitzpatrick is powered by CBT News, your go-to source for the latest news, trends, and insights in retail automotive. Subscribe for more interviews with top industry leaders, dealership innovators, and experts shaping the future of automotive.

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Jim Fitzpatrick:

Welcome to Inside Automotive with Jim Fitzpatrick. Hey everyone, Jim Fitzpatrick. Welcome into another edition of Inside Automotive, right here at the CBT Automotive Network. We're continuing our coverage of Scout Motors, having been granted a dealer license in the great state of Colorado, allowing Volkswagen back brand to sell vehicles directly to consumers. Here now to share his perspective on this is Mike Maroon. You know this gentleman, I'm sure you do if you've been in the industry for any longer than a week. He's an industry veteran. He's also the past president of Auto Nation, and uh he's got a very unique perspective on our great industry. He's also the CEO of Mike Maroony Auto. So, Mike, thank you so much for joining us this morning.

SPEAKER_01:

Jim, I'm glad to be with you.

Jim Fitzpatrick:

Yeah, it's it's great catching up with you. And uh so as Volkswagen dealer yourself, uh what what what's your immediate reaction to this? And and in fact, your dealerships are in Colorado, right?

SPEAKER_01:

Jim, I think it's very disappointing. And to see the Colorado Motor Vehicle Board uh vote six to two to support uh Scout being a direct seller was extraordinarily disappointing. Uh there's two dealers on that group, and both of them voted against it, and uh the political wind did not go in our favor in that particular decision. But it's uh it's a short-term thing. That license only goes till October, and I think there'll be a lot of twists and turns in this story between now and October.

Jim Fitzpatrick:

Yeah. What do you think drove those legislators to to vote in favor of this?

SPEAKER_01:

I'm really not sure. Uh there's not much transparency into what that discussion is. I'm sure there was tremendous pressure, uh political pressure. Uh certainly Colorado is a very pro-EV state, and you know, we welcome EVs. Uh we don't welcome direct sellers, especially those that are wholly owned by uh uh a manufacturer that has franchise dealers in the state.

Jim Fitzpatrick:

Right, right. It is amazing how they have uh successfully circumvented that whole legacy piece of the puzzle here and saying, oh no, no, we're not we're not VW, we're not Audi, we're not Porsche. This is a totally different deal. I mean, that that it just seems like if it walks like a duck and talks like a duck, quacks like a duck, I should say it's a duck, right?

SPEAKER_01:

Jim, it's they're a wholly owned subsidiary of VW uh in just in the state of Colorado. Uh Audi and VW dealers have hundreds and hundreds of millions of dollars invested in their facilities, their people, their tools, their commitment to customers. And it makes no sense to take a product lineup that could use uh higher-end SUV type products. Um we would welcome those products and would welcome the opportunity to sell them.

Jim Fitzpatrick:

Why do you suppose that a company like Scout uh goes down this this uh this path of direct to consumer versus being able to sell their vehicles directly uh to franchisees and franchise you know car uh companies and allow them to take the burden of the inventory, the showroom, the service centers, the manpower. It would seem to me as a manufacturer, it would be so much easier for me to go down that path rather than taking on that last mile to the consumer.

SPEAKER_01:

I believe they're doing it because they think they can make more money doing that. And they're basically rejecting their dealer partners that have allowed them to be successful through the history of the company. Yeah. I don't know any other reason why they would try a direct selling model.

Jim Fitzpatrick:

Yeah, yeah. Is it strained your relationships with your Volkswagen rep, or what I mean, it it's it's I wouldn't want to be your Volkswagen rep, especially in Colorado, to walk in now and face my dealers and have them go, you know, really?

SPEAKER_01:

Uh Jim, this is not new news. This has been talked about for quite some time. I think the dealers have expressed their very strong views that this is a circumvention, that it is disingenuous, and that it certainly uh doesn't help consumers uh by circumventing dealers. Uh so I don't think it's new news. I think it does strain the relationship. But in auto retail, there's a lot of ups and downs, as you well know, and you just have to every morning start with a positive attitude and think about how you're gonna serve your guests.

Jim Fitzpatrick:

That's right. That's right. The uh this obviously sets some degree of a precedence, right, for other manufacturers that are looking at Scout taking this route.

SPEAKER_01:

You know, it could, and I think that's something that all dealers would be concerned about is establishing that kind of precedent. Um but as I said, there's a long way to go from today to the day when they start manufacturing vehicles and actually retailing them. Yeah. I think there'll be a lot of twists and turns in the road, and hopefully there'll be some good discussion with VW as to how to resolve this amicably.

Jim Fitzpatrick:

Yeah.

SPEAKER_01:

I don't think any anyone's helped by uh litigious uh behavior on either side.

Jim Fitzpatrick:

Yeah, for sure. So what steps do you think dealers should be taking or considering right now? Dealers, dealer associations in Colorado and around the country, I suppose, what should they be considering right now?

SPEAKER_01:

I think there's a number of options. Uh certainly there's litigation, there's more discussion, there's negotiation. Uh I believe the Colorado auto dealers are meeting tomorrow to determine what their next steps are gonna be. And uh we will listen intently and uh uh leaders in our company participate in that board, and we believe in the board and believe in dealer associations. So I think dealer associations is a good way to fight back.

Jim Fitzpatrick:

Yeah.

SPEAKER_01:

Um dealers have very strong political capital in most markets, and I think we've got to put it to use.

Jim Fitzpatrick:

Yeah, no question about it. Colorado in uh has enjoyed a very high percentage penetration level of EVs in the past. Um, I think 27 percent, right, of the market is EVs. Is that am I getting that number correct?

SPEAKER_01:

Jim, that is correct. And obviously we've had both federal subsidies and state subsidies that have allowed us to do that. But I think the people of Colorado are are voting with their wallets and saying we want clean air and we believe in EVs, and that's been a strong support, and certainly the state government's been a strong supporter of EVs. So it's a it's a very good EV market. Yeah, it's not as good as it was uh prior to October 1st, though.

Jim Fitzpatrick:

I was just gonna ask you that. Has that had uh a real negative impact uh taking that that that uh benefit away?

SPEAKER_01:

I think there was a tremendous pull ahead, Jim. And effectively, when something like a$7,500 federal credit goes away, it's a price increase. So I think it's gonna take time for the market to uh to accept that, to deal with the pull ahead. Right. I think EVs will still sell well in 26. I doubt if they'll sell as well as they did in 25. But alternative powertrains like hybrids are coming uh fast and furious, and I think it's a it's an adequate substitute uh to a softer EV market.

Jim Fitzpatrick:

Right, right, yeah. And in terms of um uh acquisitions, are we gonna see any more acquisitions coming out of uh Mike Maroney for 2026?

SPEAKER_01:

Uh Jim, we hope so. We're actively looking. Um we've got the capital, uh, we've got the talent, and we have the passion for the business. So that's a good combination. We've got a good, smart management team, uh young, and we continue to develop people waiting for those opportunities. So we will be aggressive for the right opportunities.

Jim Fitzpatrick:

That's fantastic. And uh, you know, I spoke to uh Bernie Moreno uh just uh a week ago, had the opportunity to interview him, and we we said uh, you know, last in the beginning of the year you talked about an incredible uh market for the auto industry and the fact that tariffs would be a blip on the radar a year from now, meaning now, um, and it wouldn't even be something we're talking about. What what's your take on the tariff situation?

SPEAKER_01:

Well, I I a a blip would be uh uh a welcome reaction. I think they're a heck of a lot more than a blip. I think it's created a lot of uncertainty in the market and certainly put price pressure on the OEMs. Um Jim, my bottom line is I am very glad to be a retailer, not a manufacturer. I think the manufacturer challenges are immense, both with the pivots from the EVs and the tariff situation and the chip shortages. Right. You know, our job is when they get them to us is to delight our guests and and do what we do in auto retail, and that's to provide a great experience.

Jim Fitzpatrick:

Yeah, no question about it, for sure. Uh last question what's your prediction for 2026, the year ahead? Are a good year?

SPEAKER_01:

I think it's going to be a good year. I think 25 was a good year. I wouldn't call it a great year, but I think 26 is going to be a good year. In our company, we think the biggest opportunity is going to be in the pre-owned business and are both developing more pre-owned talent and finding different ways to go to market. We continue to believe the service and parts business is going to be very robust. And the new vehicle business, I think, will be solid but not spectacular.

Jim Fitzpatrick:

Yeah, yeah. Affordability is still at the forefront of everyone's mind right now, right? I mean, with the average price of a new car being$50,000 and payments in excess of$750, that's a real concern, right?

SPEAKER_01:

Jim, it is. And I've been talking about affordability for five years. I think if you go back in our earlier conversations, that's been a redundant theme with me.

Jim Fitzpatrick:

Yeah, you were ringing that bell early on.

SPEAKER_01:

Yeah. The challenge for us now is that we're not getting a large supply of inexpensive vehicles. And, you know, uh our our OEM partners manufacture them, but they don't make money on them, and they're pushing higher content vehicles, and we would love lower content, lower price vehicles for many reasons. But one is to make that new vehicle more affordable, and two is to get more trade-ins that are affordable as well. So we would welcome lower priced inventory, but also understand the challenges from the manufacturing side of getting a return on investment with it.

Jim Fitzpatrick:

Yeah, for sure, for sure. It's gonna be good be a concern, I think, of a lot of dealers out there, that's for sure. Mike Maroney, feeling really good about uh 2026, the year ahead, and finished a good year as well. So thank you so much for joining us on the show. Very much appreciated. Love to do a follow-up with you to see how your year is moving along.

SPEAKER_01:

Jim, thanks for having me, and want to wish you and your family and your viewers very happy holidays.

Jim Fitzpatrick:

Thank you. Thanks so much. You as well.

SPEAKER_01:

Thanks for watching Inside Automotive with Jim Fitzpatrick.