Photo: Scout Motors
Tennessee’s Motor Vehicle Commission voted on October 27 to deny Scout Motors a dealer license, with 14 of its 16 commissioners siding against the Volkswagen-owned brand. For now, that keeps Scout from selling the Terra truck and Traveler SUV directly to buyers in the state where it held the reveal of both vehicles, in Franklin, in October 2024.
A months-long application, no written reasons yet
The commission’s July 28 minutes list the filing as a dealer application from Scout Motor Sales, LLC. They don’t name a license class. They do say the director had written a list of additional questions for Scout and planned to bring the company back for a licensing decision on October 27.
The October 27 agenda puts “Scout Application” under Old Business at the Nashville meeting. I couldn’t find posted October minutes or a written order, so the commission’s stated reasons are unconfirmed, and so is whether Scout has asked for review of the denial. The next scheduled meeting is January 26, 2027.
Who decides under Tennessee law
Under Tennessee Code 55-17-103, the commission has 17 members including a chair. The industry seats are reserved for franchised motor vehicle dealers, which works out to as many as ten of the 17. Two more members must be affiliated with licensed manufacturers, one must be an independent dealer whose main inventory is used vehicles, and the governor appoints four consumer members. A company that wants to sell cars without franchised dealers is asking a board built largely from franchised dealers for permission.
The competition rule sits in Tennessee Code 55-17-114(c)(17). It lets the commission deny or revoke a manufacturer’s license when the manufacturer competes with a franchised dealer of the same line-make in the relevant market area. Three exceptions apply: operating a dealership temporarily for a reasonable period, running a bona fide retail operation that is for sale to a qualified independent buyer at a fair price, and having a bona fide relationship with an independent person who has made a sufficient investment at risk and can reasonably expect to acquire full ownership on reasonable terms. Which of those provisions the commission relied on, if any, is not in the records I could reach.
The same fight in a California federal court
Five days before the Tennessee vote, Chief Judge Cynthia Bashant of the Southern District of California denied motions for judgment on the pleadings from both Volkswagen Group of America and Scout in California New Car Dealers Association v. Volkswagen Group of America, Inc., No. 25-cv-01316-BAS-DEB. The dispute turns on how to read “indirectly through an affiliate” in California Vehicle Code 11713.3(o)(1), and the judge held that her March 30 ruling on the unfair-competition claims stands. Volkswagen AG was dismissed without prejudice for lack of personal jurisdiction. The unfair-competition claims against Volkswagen Group of America and Scout are the only ones still live.
The Auto Wire covered the Tennessee vote and the California order together. Backfire News has followed the brand since its 160,000-reservation milestone and the Traveler concept’s 35-inch tires and winch.
What Tennessee buyers are left with
Neither truck has reached customers, so no Tennessean has lost a delivery yet. The open question is who in the state is licensed to hand over keys, take a trade-in, and do warranty work on a Scout. I found no Tennessee-specific sales or service plan from the company. If direct sales stay blocked, any other way of selling in the state still has to go through the same commission.
Should a state board whose industry seats go to franchised dealers get to decide whether a manufacturer can sell directly to you, or should that decision belong to the legislature?
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