California Volkswagen Dealers File Protests at New Motor Vehicle Board to Defend Franchise Rights Against Scout Motors
Contact: Autumn Heacox, Director of Communications & Marketing: aheacox@cncda.org, (916) 441-2599 x105
SACRAMENTO, CA (May 1, 2026) — This week, 14 California Volkswagen dealers filed protests at California’s New Motor Vehicle Board, adding further legal challenges to Volkswagen and its Scout Motors subsidiary over their effort to sell Scout vehicles directly to consumers in direct violation of existing state franchise laws.
The protests target Volkswagen and Scout’s scheme to compete against its own dealers. Volkswagen has argued that Scout is an “independent” company, despite the fact that Scout is owned by Volkswagen and its vehicles will be built in Volkswagen-owned factories. The protests allege that Volkswagen is circumventing California law by positioning Scout as a distinct brand and competing with its own franchisees.
The dealers are exercising a protest right established under Assembly Bill 473, a 2023 law sponsored by CNCDA that, among other provisions, explicitly prohibits manufacturers from competing with their franchised dealer partners. AB 473 was enacted to close the loophole Volkswagen is now attempting to exploit.
“As a member of the Volkswagen Dealer Council, I have spent years working with VW in good faith to grow this brand in California. Filing a protest was not a decision any of us made lightly. But VW has left us no choice. They are competing against the very dealers who built their business here,” said Miles Brandon, President of Capistrano Volkswagen and member of the Volkswagen Dealer Council.
Rick Niello, President of The Niello Company and Board Member of the California New Car Dealers Association (CNCDA), said, “For over 105 years, The Niello Company has served the greater Sacramento region, with 70 of those years acting as a steward of the Volkswagen brand. We invest in our people, our facilities, and our customers to ensure every experience reflects the quality Volkswagen represents. Our customers deserve access to the full range of vehicles Volkswagen offers, and Scout vehicles belong in our showroom. We expect the same integrity from our manufacturer that we deliver to our customers.”
Brandon and Niello are among the 14 dealers who filed the protests, which build on CNCDA’s ongoing federal lawsuit against Volkswagen and Scout Motors. On March 30, 2026, a federal court denied motions to dismiss, allowing the case to move forward to discovery. The protests represent a second front in dealers’ efforts to enforce their rights, and signal to manufacturers, dealers, and consumers that California franchisees are prepared to use every legal tool necessary to uphold the law.
“California dealers want what VW promised them when the company awarded them franchises: the opportunity to sell vehicles made by their business partner without having to worry about their manufacturer denying access to certain vehicles and competing directly with them. We applaud these 14 dealers for asserting their legal rights to stop VW and Scout’s illegal behavior,” said Brian Maas, CNCDA President.
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About CNCDA
For over 100 years, the California New Car Dealers Association has represented California’s franchised new car and truck dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles and provide automotive products, parts, services, and repairs.
In 2025, California’s franchised new car dealers sold more than 1.8 million new cars and trucks, employed almost 138,000 people, paid $9.16 billion in state sales tax, and donated $72.09 million to charitable and civic organizations. CNCDA is the nation’s largest state association of franchised automotive dealers, with nearly 1,200 members. We provide dealer advocacy, as well as legal, compliance, and regulatory support.