Less than 12 hours after Scout Motors unveiled two racy electric vehicles last week, car dealers began threatening lawsuits.

Scout, which is backed by Volkswagen, believes dealers are history. The company would rather sell its electric vehicles directly to consumers, following in the footsteps of Tesla, Rivian and Polestar and completely rethinking the business of selling cars. But in contrast to these brands, the company receives financial support from an established car manufacturer: VW.

But if the company is nervous about challenging a century-old business model, it doesn’t show it.

“Scout is a 100 percent standalone brand, a standalone entity, a standalone structure, a standalone whole,” Scout CEO Scott Keogh said last week, noting that the Scout buying experience will be “transparent, super fast and super easy.” becomes.

To achieve this, Scout Motors relies heavily on a digital platform that the company is building itself. “Scout Motors has no legacy equipment,” said Cody Thacker, Scout’s vice president of growth. “We kept asking ourselves: If an OEM could start over, what would they do differently?”

This pure approach attempts to remake car buying, one of Americans’ most despicable financial transactions. According to research compiled by Scout, car shopping takes an average of 13 hours and 31 minutes per buyer. Only 8 percent of consumers have high or very high trust in merchants, resulting in more than 180,000 merchant-related complaints to the Federal Trade Commission each year. And nearly 70 percent of customers prefer independent service workshops over dealer service due to issues such as overcharges and delays.

Add to that the fact that 49 percent of dealers nationwide are “not at all excited” about selling electric vehicles, and Scout sees that as a reason to smooth out the experience. In addition, the company wants to better control customer data to target sales to specific areas, control vehicle deliveries and adjust incentives to keep the company profitable.

“A major point of frustration for consumers is that they want price transparency and are annoyed by the hidden fees and surcharges. Only through a direct-to-consumer model can we directly address and solve these problems,” said Thacker.

Scout envisions its sales platform as a place where customers can do all the things they would normally do at a dealership, such as purchasing accessories, scheduling service appointments and receiving details on over-the-air updates. But instead of chatting with a human trader, they may instead encounter an AI-powered chatbot. (AI chatbots have been a mixed bag for a variety of industries, but the automotive industry in particular has struggled to get them up and running.)

Scout says it will open 25 brick-and-mortar “Scout Workshops” and “Scout Studios” nationwide over the next five years where consumers can test and try out Scout vehicles. Certainly automakers have been scrambling and trying to rebrand and rebrand dealerships and service centers in various ways to avoid the negative connotation they have for consumers and to circumvent the all-around hated system.

The workshop renderings presented by Scout look elegant and airy, with open work areas with clear views of the consumer areas, where vehicle owners can sit and sip a coffee while monitoring the work being carried out on their vehicles. In addition to the brick-and-mortar locations, Scout also offers consumers who live outside a 45-minute radius of a Scout workshop the opportunity to book mobile services through Scout-certified partners. Scout will also offer Scout Studios, which will act as marketing and sales locations, similar to Tesla stores in malls across the country.

The decades-old dealer model evolved in the early 20th century when companies like Ford and GM sold directly to consumers. As the automobile industry took off, there were increasing concerns about monopolistic practices and state franchise laws emerged.

These days, car dealers have a tight grip on car sales, although some companies like Tesla, Rivian and Polestar have found workarounds. Hyundai is testing direct-to-consumer sales through Amazon (albeit with dealer involvement), and Honda is selling its Acura EV exclusively online. Dealers have made selling directly to consumers as difficult as possible by filing lawsuits and lobbying heavily through their trade group, the National Automobile Dealers Association (NADA).

As soon as Scout announced its plan to go “Scout-to-Consumer” on Thursday, retailers began rattling their sabers as usual. NADA announced that it will “challenge this and any attempts to sell directly in courts and statehouses across the country.”

One issue that makes this fight a little different is that Scout has close ties to Volkswagen, and VW dealers have long wanted the company to launch a truck in North America because they see it as a cash cow. According to Scout, at least two-thirds of the reservations received since launch were for the Scout Traveler SUV and a third were for the Scout Terra truck.

Of course, these are also the same dealers who less than a year ago argued in an open letter to the Biden administration that “Americans are not yet ready for electric vehicles” and declared that electric vehicles were simply sitting on their lots (although another study by… Sierra Club has shown that 66 percent of dealers do not have electric vehicles on their lots. NADA has been in a protracted dispute with Tesla over its direct-to-consumer model for many years.

Ultimately, the focus of the conflict is data and the question of who controls it. “Only through a direct sales model can Scout Motors get a complete 360-degree view of the customer,” Thacker said. “This means we can completely influence the customer journey. We can gain unprecedented access to customer data, which leads to deep customer insights, which in turn can lead to insights across the organization.” Dealers currently manage most customer data and relationships in the current model, including financing.

Scout seems unfazed by the dealers’ threats. In a statement, Scout spokeswoman Lindsay Bago said: “Just as using franchised dealers may be appropriate for some brands and their customers, using a direct sales model supports our customers and our customer-first strategic vision, best if we launch a new vehicle platform, a new production center and a new retail network.”

While Scout Motors has opened online reservations for its new Terra and Traveler vehicles that launched last week, the company has not yet announced a financial partner for the purchase or lease. The company could use VW’s huge finance department to handle the financing, although Thacker said part of the equation still needs to be sorted out. “I think what we can say today is that we want this to be a seamless experience,” Thacker said.

Keogh, Scout’s CEO, is confident that the model will work and support the consumer in the right way. “Scout wants to be old-fashioned,” he said The edge Last week: “We want a brand that can be trusted with data and customers because I think people are finally worried, and rightly so,” he continued. “We can control customer data, protect the customer and not inconvenience our customers. So that’s what we want to do and what it’s going to do.”