Dealers across the country are keeping a close eye on the Volkswagen–Scout class action lawsuit, and for good reason. In this episode of CBT Now, Len Bellavia, Esq. break sdown what’s happening and why it matters for the dealer network.
You can also read the full article from CBT News here below.
Two Volkswagen dealerships have filed a nationwide class-action lawsuit against Scout Motors, Volkswagen Group of America, and Volkswagen AG, claiming their plan to sell Scout electric vehicles directly to consumers violates franchise agreements and dealer protection laws. The lawsuit, filed in federal court in Virginia, automatically includes all U.S. Volkswagen dealers unless they opt out. Represented by attorney Leonard Bellavia, the plaintiffs argue the direct-sales model deprives dealers of vehicle sales, service work, and financing opportunities. The case seeks damages, legal fees, and an injunction blocking direct sales, with potential damages estimated in the billions.
Two New York dealerships have filed a lawsuit against Ford Motor Company alleging the automaker underpaid hundreds of thousands of dollars for electric vehicle battery replacements. Represented by franchise attorney Leonard Bellavia, the plaintiffs claim Ford paid only $600 per replacement instead of the roughly $22,600 required under New York warranty reimbursement laws. The lawsuit seeks class-action certification and could expand to include additional dealers nationwide. The case centers on whether OEMs must reimburse EV battery replacements at rates comparable to retail repair pricing, a dispute that could have major financial implications for franchised dealerships.
Our very own Len Bellavia was a guest on Car Dealership Guy’s Daily Dealer Live on Wednesday, March 4th, to discuss the federal class-action lawsuit challenging Scout’s direct-to-consumer strategy.
You can also read Car Dealership Guy’s in-depth coverage of the lawsuit in this article below:
DealerLaw founding partner Leonard A. Bellavia, Esq. was recently featured in NYSADA News examining OEM tactics that undermine statutory warranty reimbursement obligations—and the growing legal and legislative efforts to combat them.
The article highlights how certain manufacturers use parts exchange programs, third-party sourcing, and reimbursement loopholes to avoid paying dealers the full retail rates required under state franchise laws. It also outlines emerging initiatives in New York aimed at strengthening enforcement and closing statutory gaps that disadvantage dealers.
DealerLaw continues to advocate nationally for fair warranty reimbursement, OEM accountability, and the enforcement of dealer franchise protections. As always, if dealers don’t invoke their rights, they don’t have them.
For more information about us, or to set up an initial consultation, at no cost or obligation, call (516) 873-3000 or complete our contact form. One of our attorneys will contact you promptly.
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As automakers test new retail pathways, franchise dealers are closely monitoring where innovation intersects with franchise law. A key example is Ford’s alliance with Amazon, which places certified pre-owned vehicles into a digital retail environment while keeping dealers at the center of the transaction. On today’s episode of CBT Now, Len Bellavia, founding partner of Bellavia Cohen, PC, examines the Ford Amazon CPO initiative through the lens of franchise law, dealer operations, and what this early experiment may signal for the broader retail automotive industry.
At its core, the Ford Amazon program applies only to used and certified pre-owned vehicles, not new inventory. Vehicles remain dealer-owned, dealer-priced, and ultimately delivered through the franchise system. Customers are directed back to the dealership to complete the transaction, keeping the structure within the legal framework that prevents manufacturers from selling directly to consumers.
The model represents a hybrid approach rather than a departure from the franchise system. While Ford previously explored direct sales strategies that were later abandoned, this initiative acknowledges the role dealers play in pricing, inventory management, and fulfillment. In that sense, the program reflects an effort to modernize retail access without fully bypassing existing protections.
Operationally, the structure introduces new considerations for dealers, particularly around trade-ins. Trade values are set within defined limits, including a maximum adjustment of $750 once the vehicle is physically inspected. While this creates consistency on the front end, it also raises questions about how condition-related discrepancies are handled when repairs exceed that threshold.
Return policies add another layer of complexity. While marketing materials have referenced extended return windows, the program rules outline a shorter notification period followed by a limited timeframe to return the vehicle. Managing returned inventory, even temporarily, affects cash flow and inventory turn, especially when vehicles cannot be immediately resold.
Despite these challenges, dealer participation suggests measured interest rather than resistance. The program has launched in select states, including Washington, California, and Texas, where some dealers view it as an opportunity to test whether digital exposure through a platform like Amazon can drive incremental traffic without undermining dealership control.
From a broader perspective, the initiative offers insight into consumer behavior. Fully digital vehicle purchases have yet to gain widespread adoption, even during periods when in-person transactions were limited. Used vehicle buyers, in particular, continue to value physical inspection and dealership interaction before committing to a purchase.
The larger question is not whether this program will dramatically reshape used vehicle sales, but what it may preview for the future. If refinements are made and the model proves workable, similar structures could be explored elsewhere. That possibility keeps dealer councils and legal advisors focused not just on the current framework, but on how future iterations are shaped.
For now, the Ford–Amazon alliance stands as a controlled experiment. It reflects the industry’s effort to balance digital innovation with the practical realities of retail automotive operations, while reinforcing that any evolution of the sales model must continue to operate within the franchise system’s established guardrails.
A recent letter from the Alliance for Automotive Innovation to the U.S. Department of Justice (DOJ) has initiated intense backlash within the automotive retail industry. The letter, which calls on the DOJ to examine state dealership, franchise, and warranty laws, has been labeled a “declaration of war” by many in the dealer community. On the latest episode of CBT Now, we are joined by Len Bellavia, Esq., founding partner at DealerLaw.com, to unpack the legal and strategic implications of this move and what it could mean for the future of dealer-manufacture relationships.
Bellavia clearly stated that the automaker group’s letter was not only inflammatory but also strategically unwise. He argues that the Alliance misuses an executive order originally signed by President Trump in its appeal to the DOJ. This order, which is meant to support small business startups, is being used as a tool to undermine decades of state-level franchise protections.
At the core of the Alliance’s arguments is the push to eliminate revealable market area protection. These laws prevent manufacturers from placing new dealerships near existing ones, a safeguard common across franchise industries and essential for protecting dealer investments. Bellavia argues that removing such protections would pave the way for manufacturers to saturate markets and squeeze dealers out of viability.
Despite the seriousness of the challenge, Bellavia remains optimistic about the industry’s responses. He praised the National Automobile Dealer Association (NADA) for issuing a detailed rebuttal and encouraged all dealers to read the Alliance’s letter to understand what’s at stake. Additionally, he predicts that the fallout will ultimately strengthen the dealer community’s position.
The letter, he suggests, could serve as a powerful legal tool for dealers to push back against costly manufacturing mandates, such as multi-million-dollar facility renovations, forcing inventory acceptance, or inequitable warranty compensation.
“I would think that every general counsel for every OEM should disavow any participation or approval of this letter if they’re smart.”
Bellavia also addressed the constitutional and legislative barriers standing in the Alliance’s way. Under the Supremacy Clause, federal law can override state law, but no federal legislation currently governs dealer franchise frameworks. Instead, over the past 70–80 years, bipartisan, state-specific processes have established these protections, which manufacturers have consistently failed to overturn.
He concluded by speculating that the Alliance may face internal turmoil as a result of the fallout.
The Alliance for Automotive Innovation has asked the U.S. Department of Justice to examine whether state franchise laws restrict competition and harm consumers, provoking a battle with the National Automobile Dealers Association in an auto industry clash of the titans.
The alliance’s May 27 letter, addressed to the government’s new Anticompetitive Regulations Task Force, specifically asks the Justice Department to examine state laws governing vehicle warranty service and state laws that limit establishing franchised new-vehicle dealerships in certain areas.
NADA views the alliance’s actions as “a direct attack to the franchise system,” the group told its board and its Automotive Trade Association Executives in a July 14 email obtained by Automotive News. The Automotive Trade Association Executives represent more than 100 state and metropolitan franchised new-car dealer associations in the U.S. and Canada.
The alliance represents major U.S. automakers, and NADA represents more than 16,000 franchised car dealers.
“If there is such thing as a holy war in the franchise world, it’s a holy war,” said Don Hall, CEO of the Virginia Automobile Dealers Association. The alliance’s letter is “an affront to this industry.”
The U.S. Department of Justice did not respond to a request for comment. It established the Anticompetitive Regulations Task Force in March as part of an effort to eliminate anticompetitive state and federal laws and regulation that “undermine free market competition and harm consumers, workers and businesses.”
As the automotive industry braces for the financial ripple effect of U.S. tariffs on Chinese goods, Len Bellavia, founding partner of Bellavia Blatt and a prominent attorney for dealers, is urging retailers to shift focus from inventory constraints to long-term operations profitability and legal preparedness. During the latest episode of Inside Automotive, Bellavia outlines the growing list of manufacturer tactics, intentional or otherwise, that could cost individual dealers hundreds of thousands, if not millions, in annual gross profit.
According to Bellavia, one issue taking root involves the short payment of dealer reimbursements for warranty repairs and no-cost battery replacements. Although these occurrences may seem isolated, Bellavia emphasizes that the cumulative loss in gross profit can reach $100,000 to $125,000 per store annually. These patterns, he suggests, are not random. “Manufacturers are always thinking three to six months ahead,” he said. “There’s going to be an increase in fixed ops, and dealers are going to become smart about this. So they’re pushing back early by underpaying dealers and hoping it slips under the radar.”
Rather than pursuing manufacturers individually, Bellavia recommends that dealers work through state associations to identify common issues and act collectively. He estimates the industrywide impact could be as much as $1 million per rooftop each year. With retail reimbursement alone, Bellavia argues that many dealers are leaving an additional $250,000 annually on the table due to flawed processes and improper discounting on the customer-pay side, which negatively impacts reimbursement submissions.
In a major victory for car dealers, the U.S. Appeals Court has struck down the Federal Trade Commission’s (FTC) controversial CARS Rule, a decision that industry advocates view as a rejection of regulatory overreach. In today’s episode of Inside Automotive, Leonard A. Bellavia Esq., founding partner of Bellavia Blatt – DealerLaw.com, breaks down the ruling and its implications, highlighting the FTC’s flawed approach and the automotive industry’s already stringent regulatory environment.