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Runtime: 9:38
0:00 VW Dealers Sue to Block Scout’s Direct Sales
1:06 Scout Reveals 160K Reservations & Production Timeline
2:23 Tesla Workers Reject Union in Germany
3:27 U.S. Hits Record Car Loan Debt
4:19 Stellantis Sells EV Vans for Same as Diesel
4:46 Honda Revives Insight Again, But as Pure EV
5:46 Hyundai & Kia Cut EV Models in the U.S.
6:33 BYD Makes Big Improvements with Next-Gen Battery
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VW DEALERS SUE TO BLOCK SCOUT DIRECT SALES
Scout Motors is facing more pushback from Volkswagen dealers on its plan to sell direct to consumers. Two VW dealerships in New York and Connecticut are suing Volkswagen Group and Volkswagen of America for breach of contract. In the U.S. any automaker that has used franchised dealers in the past can’t forego the dealership model with another one of its brands. But despite being funded by the Volkswagen Group, Scout claims it’s independent from Volkswagen, so it should be allowed to sell direct. I think there’s actually some decent arguments for why Scout has a case for itself and we went over a lot of that in Autoline After Hours #775, which featured Ryan Decker, VP of Strategy and Brand, at Scout Motors. However, this is a growing battle for VW and Scout. Dealers in California, Florida and Colorado also have pending lawsuits over Scout’s direct sales plan.
SCOUT MOTORS REVEALS 160K RESERVATIONS & PRODUCTION TIMELINE
And thanks to an Automotive Press Association event at Scout’s suburban Detroit Innovation Center yesterday, we know that the brand has a plan for dealing with the lawsuits and direct sales and that it’s executing that plan now. Those are claims from Scout CEO Scott Keogh. However, when pressed to provide more information, Keogh would only say it has a plan and it’s executing that plan. So, no details. But we did learn a little more about the progress of the company. Its plant in South Carolina, which is currently under construction, is being built for a capacity of 200,000 vehicles a year, but it could double that if it needs to. Keogh says he hopes Scout will one day cover that entire 200,000 unit capacity, but concedes that the plant could make vehicles from other brands as well. Right now it has 160,000 reservations; 87% of those are for the EREV version and 70-75% are for the Traveler SUV. While the first engineering and production validation builds will kick off this year, actual production vehicles won’t start rolling down the line until late 2027 and then deliveries happen after sometime in 2028.
TESLA WORKERS REJECT IG METALL UNION IN GERMANY
German union IG Metall suffered a big setback in its attempt to unionize Tesla’s plant in Berlin. It failed to win a majority in the automaker’s works council election this week, securing just 13 of the 37 available seats. That’s actually three fewer seats than it used to have and it means that Tesla’s plant remains non-unionized. Tesla and IG Metall were in a bitter feud leading up to the vote. The union accused Tesla of creating a “toxic” work environment. Then Tesla filed a criminal complaint against a union representative, claiming the person secretly recorded a works council meeting. But based on the outcome of the election, it appears workers are more on Tesla’s side.
RECORD CAR LOAN DEBT: AVERAGE TRADE-IN DEFICIT HITS $7,200
The amount of money that people still owed on their vehicle trade-ins hit a record high in the 4th quarter of last year. According to data from Edmunds, buyers still owed an average of $7,200 on their trade-ins, which broke the previous high by about $300. And 27% owed more than $10,000. More worrisome is that’s two consecutive record setting quarters. Plus, the data shows that 29 percent of new-vehicle buyers with trade-ins owed more than their trade-in was worth, which was up 4% from the year before. And that’s making it harder for those people to get a deal on a new car. Part of the problem is falling used vehicle value, but with new car prices going up, there should be more of a rush to the used car market, and experts think we’ll see a drop in owners with negative equity.
STELLANTIS REACHES PRICE PARITY FOR ELECTRIC VANS IN EUROPE
Stellantis’ electric vans have reached cost parity with their diesel counterparts in Europe… well at least until the end of June. The company’s commercial division, called Stellantis Pro One, is going to sell all of its mid-size and compact vans for the same price as their diesel versions for roughly the next 4 months. That’s 8 vans in total from its Citroen, Fiat, Opel and Peugeot brands.
HONDA REVIVES INSIGHT NAMEPLATE PURE ELECTRIC MODEL
Honda is reviving the Insight nameplate once again. This time it will be an all-electric model that’s based on Honda’s e:NS2 EV, which is only sold in China. It has a range of 310 miles or 500 kilometers based on the WLTC test cycle. The new Insight will be built in China and then imported to Japan, but Honda declined to say if it will be sold in other markets. Honda only plans to import 3,000 Insights to Japan and it goes on sale in March, but pricing wasn’t announced. The original Insight debuted in 1999 as a three-door hybrid. Honda dropped the model in 2006 but revived it in 2009 as a five-door hybrid. It was discontinued in 2015 but Honda brought it back three years later as a four-door sedan but it was once again killed off in 2022.
HYUNDAI AND KIA CUT EV MODELS IN U.S. AMID TARIFFS
And while Honda is bringing back a model, Hyundai and Kia are trimming their lineup. Edmunds reports that Hyundai is dropping the standard Ioniq 6 in the U.S. while the performance N version will still be sold but only in limited numbers. Hyundai didn’t say why it’s discontinuing the Ioniq 6 but tariffs likely played a role, since the model is built in South Korea. Ioniq 6 sales were down 15% last year in the U.S. and they plummeted another 77% in the first two months of this year. And while the performance version of the Ioniq 6 will remain, Kia is dropping the performance version of the EV6 in the U.S. Tariffs likely lead to that decision too since the EV6 GT is also made in South Korea.
BYD UNVEILS NEXT-GEN BLADE BATTERY WITH 1,000-MILE RANGE
BYD made some big improvements to its Blade EV batteries. It just launched the second-generation which it says can offer fast charging in extremely cold temperatures. The new battery can charge from 20 to 97% in just 12 minutes at temperatures as low as -20 degrees Celsius or -4 degrees Fahrenheit. And the new battery has a range of 483 miles or 777 kilometers. There’s also a higher energy density version for its luxury and performance models that offers 1,000 miles of range.
And a quick reminder to tune into Autoline After Hours at 3PM EST today. John and Gary, along with Tom Murphy and Lindsay Brooke, are going to analyze the big CEO shuffle that’s been going on in the auto industry. Plus, the top news stories of the week. So, don’t miss out. But that’s a wrap for this show and I hope to see you later.
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160K SCOUT reservations doesn’t seem like a lot. If the conversion rate is high, maybe scout will be OK. If conversion rates of other recent cars released with reservations is any indication, 160K reservations is not a lot at all. Hopefully they can push that reservation number up by 2-3X before pricing release to have a big buffer when the expected cancellations occur.
Sean, I’d be interested to hear your take on the VW dealer vs no dealer issue. Depending on VWs organization structure, Scout is owned by another OEM or just has the same parent as another OEM. Big difference. On the other hand, Scout is a descendent of a truck company that DID have dealers, although they were not VW dealers. My personal view is, that since other companies (GM, Ford, Chrysler, VW) previously had dealer networks that did NOT sell all of their brands, VW dealers have no automatic right to sell Scout, just as they don’t have the right to sell Audi, Porsche, Skoda, Seat etc. On the other hand, I do lean towards VW having to set up a new dealer network (again depending on their corporate structure). Finally, even if VW did set up one dealer in each state (perhaps owned by a corporate cousin like Traton or even specific VW executives) would they be forced to license additional dealers? After all, Scout was once part of International Truck which is currently part of Traton.
Do Scout reservations require an actual commitment, like a non-refundable deposit? That could explain the low numbers compared to, say, Cybertruck.
Interesting that a lot of those reservations are for an EREV, which no one in North America knows anything about, except BMW i3 REx owners.
I realize this is a moot point but the idea of car dealers having a virtual monopoly is certainly not in the best interests of free trade and competitive business. Maybe necessary 100 years ago but not now.
There are lots of other examples where the rules benefit only the incumbent but it’s wrong.
My comment has nothing to do with the too often appalling business practices of these multi-millionaires.
The Scout leadership seem to be talking out of both sides of their mouth. They say that is stand alone, but then say that they hope they can fill out capacity at their plant by their own models or that of other brands! VW brands? As a brand of VW, your not a stand alone operation! Were Scouts sold at Scout dealerships or dealerships of their previous owner? If so, wouldn’t that make them fall under the current dealership laws in place? The thing is this, VW should want to play nice with dealerships. For, should they win the lawsuit and they can operate Scout as a direct sales unit and not have dealerships, where will the Scout vehicles go to be serviced?! VW/Audi dealerships?! Also, isn’t Volkswagen/Audi hoping to build their own version of the Scout’s vehicle? Where will that vehicle be sold? InAudi dealerships?! What if the Volkswagen/Audi dealerships refused to service the Scout vehicles? What if the Audi dealerships refused to order the Audi version of the Scout vehicles in protests to the direct sells of the Scout brand? VW could very well win the lawsuit but lose in the long run!
So Trump tariffs resulted in fewer models at two brands, and probably more to come. So, fewer choices for American consumers. How does that benefit us? Still struggling to see the benefit of tariffs, other than an additional way to raise funds for the government to spend, and not necessarily on balancing the budget or paying down the national debt. And now having to pay back the tariffs collected since April, the whole thing is just a hindrance to business and a drag on the economy. Yeah, I am tired of this kind of “winning”. I am convinced that the only Golden Age coming from this administration is the one on the walls of the Oval Office.
It seems like other nations around the world were not struggling to see the benefits of tariffs that they levied against the United States.
Gary, other countries don’t put tariffs on countries for political reasons, like Trump putting 50% tariff on Brazil because they actually held Bolsonaro accountable for his coup attempt.