A federal judge in San Diego denied Volkswagen and Scout Motors’ motion to dismiss this past March. The case is now in discovery, which means two years of work CNCDA has put into this fight is about to be tested in open court, and stakeholders are waiting and watching.
For two years, CNCDA has fought to ensure California law is upheld, first against Sony Honda’s Afeela brand and now against Volkswagen’s Scout Motors. Protecting franchised dealers is the reason this association exists, and we’ve been defending you, our members, for over 100 years. Now, manufacturers are testing us, and we will not go quietly.
The first attempts to skirt the law began in October 2024, when VW/Scout announced plans to sell directly to consumers in California. Sony Honda followed three months later with similar plans for their Afeela brand. CNCDA then sued VW/Scout in federal court in April 2025 and sued Honda/Afeela in California state court in August of that year, arguing that both manufacturers were violating AB 473, a law our dealers fought to pass in 2023, which specifically bans this type of direct competition. Both manufacturers moved to dismiss. Both motions failed.
Roughly one year later, the court ruled that our case against Honda could proceed. Honda then announced the suspension of its Afeela project, and our case against Honda has since concluded. However, Sony and Honda could make these attempts to sell new models directly to consumers again in the future. With regard to our Volkswagen litigation, the court denied Scout’s motion to dismiss, bringing renewed momentum to our case. Separately, this past April, 14 VW dealers filed protests against VW/Scout at the New Motor Vehicle Board, with funding provided by CNCDA.
That brings us to where California’s dealers are today: in discovery in federal court. Notably, roughly 20 other states have similar franchise protection laws that safeguard dealers from manufacturers using their size and capital to circumvent the dealers who built their brands in the first place. Undoubtedly, courts across the country look to rulings from states with comparable statutes when deciding their own cases. Don’t forget, California is the largest new-vehicle market in the country by a wide margin, and any manufacturer pursuing a direct-to-consumer strategy needs OUR market to make that strategy work. A ruling in our favor here becomes the precedent other states cite. Every manufacturer is watching, and when we prevail, they will see that our resolve and defense of the law will not waver and that this model will not succeed in California or any other state.
However, our victory cannot happen without resources. Expert witnesses, discovery, briefings and the hours our outside counsel puts into building a strong court case all cost real money. CNCDA has covered these expenses for 25 years without asking anything of our members. Now, with the stakes as high as they’ve ever been, we believe the time has come to call on your support to help us muster the show of strength we need.
While NADA has provided some financial support for our efforts, we’re asking California dealers (whether you sell Volkswagens or not) to contribute a suggested amount of $5 per vehicle sold at your dealership in 2025. That said, ANY contribution is appreciated and helps us fight the good fight. Help CNCDA Defend Your Franchise.
Contributions to the CNCDA Legal Fund aren’t political donations and aren’t tax-deductible, but they’re the most direct way to put your resources behind our defense as we shape industry operations in California for years to come.
If you’ve never contributed to our legal work, this is the time to start. A ruling in our favor doesn’t just resolve one lawsuit. Your financial support protects your dealership now and for future generations. Most importantly, it sets the precedent that California’s dealers will not be brushed aside, and we will not back down.
