Inside Automotive with Jim Fitzpatrick, powered by CBT News

Mike Stanton and Don Hall on the Scout Motors Dealer License

• Jim Fitzpatrick • Season 1 • Episode 54

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Colorado’s approval of Scout Motors’ dealer license has intensified concerns around direct-to-consumer sales and the future of the franchise system. On this special episode of Inside Automotive, Mike Stanton, CEO and President of NADA, and Don Hall, CEO and President of the Virginia Automobile Dealers Association, examine what the decision means for dealers nationwide and why the issue extends far beyond one state. They explain why the ruling represents the start of a longer legal and legislative battle, not a final outcome, and outline how dealer advocacy efforts are already underway at both the state and national levels. The conversation underscores the importance of dealer engagement, unity, and sustained advocacy as OEMs increasingly test franchise protections.

Topics covered include:

  • Why the Scout Motors ruling raises national franchise concerns
  • NADA’s ongoing legal challenges in multiple states
  • The risks of OEM-led direct-to-consumer strategies
  • How the decision impacts dealer–manufacturer trust
  • The role of dealer advocacy and grassroots involvement
  • What dealers should expect as the legal fight continues

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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SPEAKER_01:

Thanks for watching Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick:

Good morning, everyone. Jim Fitzpatrick. Welcome into another edition of Inside Automotive, which I think is really a special edition of Inside Automotive, not just because of the two amazing guests that I have today, but also because of this very, very important topic. If there was ever a show that you need to listen to at uh CBT News, it is this one. This could be the beginning of something that could really be uh have a very negative impact in the auto industry. So Colorado's approval of Scout Motors Dealer License is sending ripple effects well beyond the state of Colorado, especially for franchise dealers. And uh here to share their perspective and what dealers should be watching. Next is Mike Stanton, CEO and president of the National Automobile Dealers Association, and also Don Hall, CEO and president of the Virginia Auto Dealers Association. My only question is who's watching the auto industry if you two uh powerhouses are sitting here with me this morning. So thank you so much for joining me. So um, Mike, I'll I'll start with you. You know, this issue um isn't new per se to the state of Colorado, but what do you think drove them to this decision to allow Scout to actually get a dealer's license within the state?

SPEAKER_03:

You know, I I first off, thanks for having us, Jim. I can't get in any of their heads. What I can uh and I'd like to share is that this whole issue of direct to consumer, uh, Scout in particular, a fila as well, has been on the top of NADA's agenda for over four years now. So this development in Colorado, I'll call it unfortunate, but it is far from over. And I think Matthew pointed to some of that uh when he talked to you to you a few days ago.

SPEAKER_01:

Yeah.

SPEAKER_03:

But the NADA, we have been in this fight, as I mentioned, for really over four years. You you have meetings, you send letters, uh, you you you get with the press to express dealer concerns. Uh, and once all the talking and the letter writing is over, it's time to fight. And NADA is in that fight in a very meaningful way in two states where there are legal challenges, those being Florida and California. And by the way, I talked to Brian Moss, uh Don and my colleague out in California. Yeah, and we're gonna we've got some momentum there that Brian's gonna be able to share uh with all of us in in the coming days. So I just view this as a very early inning development in what has been and will continue to be a long, long fight, and it's a fight that we're gonna win because we are on the right side of this thing.

Jim Fitzpatrick:

Yeah, yeah. What what what uh what comments do you have about that, Don?

SPEAKER_02:

Well, first of all, I appreciate very much what Mike and NADA is doing, but I think what's critical that Mike and I both would agree with wholeheartedly is it needs dealer involvement. This is a big deal. This is not one of those things that will just go away in the dark of the night without a lot of work and hard work, whether it's through the court system, through lobbying efforts, and so forth, dealers need to pay attention to this broadcast today and others dealing with this subject matter. This is the beginning of the end of the franchise system if we don't prevail. And the two of us and many of our peers are very committed to making sure that the dealers prevail. We cannot do so without 100% dealer involvement. And that means you phone calls, getting involved, legislature, that means money. It means lots of things. You damn well better care about this issue because if they are successful in doing this, other manufacturers will follow suit in time.

Jim Fitzpatrick:

Sure. Uh Mike, is this to to Don's point, this much more important than let's say a Tesla getting the license or maybe a Rivion because of the fact that this is a wholly owned subsidiary of Volkswagen, and that that is a game changer?

SPEAKER_03:

Oh, yeah. Well, the franchise system, as as we would all agree, is certainly the best way to take care of customers here in the United States. And that's proven for over a hundred years. But this is completely different. And and I've talked about it on your show before and and with others. I mean, the issue here is one of trust. In any relationship, there has to be trust. And when one side doesn't trust another or breaks that trust, you've got a real problem on your hands. You know, we're very close with the VW dealers, via our dealer attitude survey. We have VW dealers on our board. Uh, we've got representation on the council. I just spoke with with some of the council a couple of days ago. I mean, this is a real issue. These dealers have gotten the VW and Audi brands through tough times. We talk about a violation of trust. Look what VW did with Dieselgate.

Jim Fitzpatrick:

Oh, yeah.

SPEAKER_03:

Violation of trust of all of its customers and really all consumers here in the United States. The dealers have carried them through those tough times. The tough times with Audi and the sudden accelerate acceleration, recent problems with the ID4. Look what they're doing with the buzz. You know, the the dealers have always uh backed up these brands and have treated it like it's a true partnership. And now we're we're in a situation where they're trying to compete directly with their dealers. And what does that look like? I don't know. We're still we're still years away, but you think you've got Volkswagen, AG, Germany, they're making the decisions, they're the bank. Uh there's there's clearly already been a diversion of resources into this new brand, which by definition means that those resources are not going where they're desperately needed. Uh VW, Auda, Audi, and even Porsche dealers. You know, Porsche's in a world of hurt right now. Pardon I just said that, but the tariff situation has really put a hurting on Porsche. So this has been uh it's been a head scratcher for sure. I know the administration and some of our friends and the Senate are taking a look at this uh as well.

Jim Fitzpatrick:

Don, the the big question on this always comes up why? Why would a manufacturer, I just asked this of Mike Maroney and also Matthew, um, why would a an uh an OEM want to even go down this road of taking care of that customer on that last mile where you've got an incredible network of franchise dealers that have put up millions, if not billions, of dollars in incredible showrooms, in service centers, in managing the manpower in a dealership, uh, and the advertising, the marketing, all that goes into it. Why does a manufacturer even want to do this?

SPEAKER_02:

I think it's they're playing the long game, meaning this. And let me stop for a quick second. I I really appreciate what Mike just said. You know, Mike is a is a great politician, he's smart, and he's smooth. Um, I am none of the above. I I am a scrapper, a fighter, and I want to kick the backside of VW, and I want dealers to get also energized to do the same. Speak up, speak out, speak often about Jim, the very point you just made. I've got a dealer I talked to today. He'll spend about a million five a year. He gives uh uh a warranty or a guarantee of engines for life when you buy from him. Yeah, he spent a million five this year taking care of things that weren't covered under warranty. The manufacturers will not do this. The goodwill that we do in our communities, we make a difference. I've got VW dealers that are losing product, not gaining product, they're losing product, as Mike just alluded to. And now we're talking about creating a separate division so that we can't have it. Ford will be next, General Motors and others will be back. And so this requires that we really have a combative, argumentative, a very disciplined approach, meaning telling manufacturers at every turn, at the make meetings, at any anywhere we can, when you're asked what bothers you the most, Mr. Dealer, what bothers me is the idea that a franchisee who is who has spent 75 years building VW in the United States of America can can have its franchise or VW go out and sell direct and cherry pick certain products. And oh, by the way, if the current the previous administration had stayed around for this new administration, we would have been strapped with even more VWs to sell, meaning that they could pull out even more, all we would have left to sell would be ice. And when people don't have an option and ice isn't available and they're not putting new things into ice type vehicles, then the VW would have been the great winner with nothing but EVs selling direct through through Scout. So this is a critical time, and I I love deals with all my heart, and I've had the privilege of working for them for a long time. This is one of those times where you've got to get out of your desk and say to your associations, your state associations, what are we doing to support NADA? What are we doing to support our state? What are our laws look like? How strong are our laws? The problem is that we have great lawyers in these state associations, but boy oh boy, is a language very, very different. Come to our state where they're headquartered, and we'll have a uh a tremendous war because our language is very strong, and I am prepared to litigate against VW. Come to our state, let's do it here. We'll fight you because it matters. And this is the beginning of the end if we're not real careful.

Jim Fitzpatrick:

And you touched on this uh earlier, Mike, and that is the precedence that it stands, that it represents with the OEMs that are all looking at this same situation, right? And I think that's that's what you both are saying here today is that this could be the beginning of something that really becomes very ugly, right?

SPEAKER_03:

Well, you you never know, Jim. Yeah. I mean, I we're we are at NADA we have access. We go in and we meet with the car companies. Our mission is to preserve, promote, improve uh the franchise system. And we're not hearing any of that chat right now, but I think to Don's point, this is one that could be a game changer. Yeah. And that's why we're we're willing to throw the kitchen sink at it. And I think it's important, and and Don mentioned that the dealers need to get involved. Uh it's important, we're not gonna disclose legal strategy here. I mean, obviously that that needs to be kept uh close to the vest, but I think it's important for the dealers and your listeners to know how things work. I mean, the NADA is set up, we're committed, and we're we're well well-funded organization. We are set up to support the states. And that's where the the uh action's gonna be in the state houses, that's the franchise laws. Yeah. So if a state, if the dealers decide to step up and challenge, and I think that's what's gonna happen in Colorado, that's what I'm hearing, then the NADA, through its executive committee, will decide whether or not to support that. And I can tell you the dealers on our board, there's 65 of them, they're laser focused. Uh there's not much debate that goes on when these requests come in because we know how important this is. It's uh it's it's pretty quickly decided, turned around, just gotta fit within our overall strategy.

SPEAKER_01:

Yeah.

SPEAKER_03:

Uh, but we are we're coordinated and and uh we've got a strategy we're working it, but to Don's point, the dealers need to care about this.

Jim Fitzpatrick:

Yeah.

SPEAKER_03:

Because it it could have impacts throughout our whole our whole system.

Jim Fitzpatrick:

Right, right. And Don, this is different than a Rivian and a Tesla simply because of that that connection to VW, right? I mean that that's the game changer here.

SPEAKER_02:

It it it is because those brands don't have a franchise system, nor have they ever. But let me remind everybody listening today. We have letters from the Department of Justice that were sent to the Department of Justice that articulated the fact that the OEMs wanted to do this. Now, many of them offline have said to me, and certainly to Mike, much more so to Mike than me, have said, Well, we don't we don't really support the letter that our that our International Association put together representing almost all the makes and models. We don't really support that letter. Right. Let me assure you, people saw that letter with the OEMs. Take that one to the bank.

Jim Fitzpatrick:

That's right.

SPEAKER_02:

They saw that letter. So it's not just two guys here and three guys with you interviewing us, John, I mean Jim, and saying, well, we think this might happen or whatever. There is absolutely an interest on the part of all OEMs to see how VW works this out. And if they work it out, and then I go back and Mike can't say this, nor should he say this, nor should he even believe what I'm saying is true. But I've got some peers that are damn good at what they do and and they're forceful and they're aggressive, and I've got some peers that ought not to be in their roles. It's a good time to look at your association and say, are we doing the kind of job that we need to do? We need to be aggressive when it's important to be aggressive. We also want to get along and go along when it's important to get along and go along. This is a time where aggressiveness needs to be out there. It's the forefront. We need good, strong lawyers helping us write the language to make sure that we can go to court and we've got a reasonable opportunity to prevail. This system called the franchise system is what protects consumers. It is what Henry Ford himself created a hundred years ago. It is a good system that creates competition. Get rid of competition, protection for consumers, and they will not enjoy buying these$80,000 cars with no one to look out for their best interests. That's what Mike does, that's what Don does, and that's what all of our peers are doing as well, nationwide.

Jim Fitzpatrick:

That's right. That's right. Mike, do you want to add to that?

SPEAKER_03:

I don't think there's much to add. I think Don said it very, very well.

Jim Fitzpatrick:

What he said.

SPEAKER_03:

I I concur. Yes.

Jim Fitzpatrick:

That's right. That's right. Well, I want to thank you both, but before I let you go, um uh just switching gears a little bit with you, I want to get your predictions for the year ahead. And uh, Don, I'll start with you. What what what uh from from your perspective, uh, with all that we've gone through here in the last uh year and 2025, how are you feeling about 2026?

SPEAKER_02:

This is not just me saying it to say it. Look, 47 years of my life, I've been blessed to be in this industry working in the retail and at VADA. Car dealers, no matter what cards we're dealt with, learn to survive. Yeah. Occasionally, like we're talking about today, this is not survivable. In other words, we have to stop it. But I don't worry about what 26 looks like. I think things that are going on in Washington that Mike has been instrumental involved in helping us get some things. I think the dealers' attitudes, yes, we're gonna have surplus inventory, we know how to sell it. We've had to do some retraining, retool tooling, and dyeing, if you will, a little bit in our systems. But our I I believe in our our industry, I believe in the people that are working in our business, and no matter what cards we're dealt, we will continue to take care of the consumers and the people that work for us in our dealerships. So I think 26 will be a great year, and I look forward to seeing that calendar over for another great year in the great auto industry that we had the privilege of serving in uh throughout this country, doing the kind of things that Mike and I do.

Jim Fitzpatrick:

Absolutely. And Mike, I'll give you the last word. What what's your feeling about the year ahead?

SPEAKER_03:

Uh looking back, it was a great year, 2025, from a policy perspective, and I would say a good to very good year from a business perspective, and we're expecting another good to very good year in 2026.

Jim Fitzpatrick:

Awesome. Awesome to hear. We're all excited about it. We're excited to cover it and uh work with all the associations and sharing this type of information and other type of information, all mostly positive coming out of the auto industry. Mike Stanton, CEO and president of NADA, and Don Hall, CEO and president of the Virginia Auto Dealers Association. I want to thank you both so much for joining me on the show today. I know that uh you guys are both very, very busy, especially as we wind down the year. So I wish you both a very happy holiday season and look forward to uh meeting up with you again uh after the new year.

SPEAKER_02:

Thanks, Jim.

Jim Fitzpatrick:

Thanks.

SPEAKER_02:

Thank you, Jim.

SPEAKER_01:

Thanks for watching Inside Automotive with Jim Fitzpatrick.