Here’s Scout’s Full Presentation On How It Plans To Sell And Fix Cars Without Dealers

There is some part of me that felt as if the launch of the Scout brand was Volkswagen essentially trying to start over in America after far too many years failing to offer products that Americans actually want. This rebirth would start with a brand that has a rich American heritage; a Detroit headquarters near talent and a strong supply base; U.S. planners making product decisions with an early focus on SUV and trucks (the U.S.’s favorite segments); a plant in the less-unionized South; and a sales and service model that cuts out dealerships. This article is about that last part; let’s take a deep dive into how Scout plans to sell and service the Traveler, Terra, and whatever else is coming next.

Last week’s Scout announcement pretty much vaporized the internet as folks went gaga over two beautifully styled off-roaders with a unique powertrain that could be perfect for the 2024 market. But as amazing as the two products are, it was the sales/service presentation that really surprised me.

Volkswag — aherm, Scout — said during its presentation last week: “If an OEM could start over again, what would they do?” One answer apparently involves selling cars directly to consumers using an app as well as brick-and-mortar locations spread around the country. These locations will not be dealerships, but rather studios and workshops, meant to display vehicles and allow for service. The actual purchase of the vehicle is to be done entirely digitally and is meant to be as easy as “ordering a T-Shirt on Amazon.”

Let’s jump into the presentation, which begins with a Table of Contents showing six main sections of Scout’s sales and service plan: Direct Customer Relationships, Transparent Pricing, National Network, Speed in Purchasing and Servicing, Seamless Digital Integration, and Long-Term Customer Commitment:

Scout Thinks Interacting With Customers Will Give Them Helpful Data

The first few slides basically discussed how Volks — I keep doing that, sorry, how Scout — cutting out dealerships is going to yield benefits for the company. Scout’s VP of Growth, Cody Thacker, mentioned that eschewing dealers and instead “Selling Scouts to Scout owners at Scout-owned Sales Locations” allows the company to interact directly with the customer. The benefits of this, per Thacker, is unified marking and branding, as well as a “360-degree view of the customer.”

Basically, Scout believes that having a dealership between it and a customer limits the insights the company can gain about the consumer. That’s one thing that Scout emphasized: It wants customer data so it can gain deep insights to make smart decisions. (Note that CEO Scott Keogh said earlier in the day, in the really well-done speech that impressed many journalists, that “Our customers will never become our products,” so Scout apparently isn’t planning on selling customer data).

As you can see, Scout anticipates higher returns for its company (and also promises lower prices for the consumer, though I’d be surprised) by going direct-to-consumer; it says this setup allows for more nimbleness compared to a dealer model — the ability to scale back or crank up volume more quickly in certain markets.

What’s more, Scout says a model in which it is interacting directly with consumers — and not through dealers — lets the company more easily launch targeted incentive programs based on where vehicle sales are succeeding and where they are falling short. Plus, Scout says it can understand the vehicle weaknesses better in different markets, it no longer has to worry about vehicles being offered with options that consumers don’t want, and what’s more, Scout says it expects a reduction in warranty expenses. (I later asked about how this model could reduce warrant expenses, and the answer, as I understood is, is that it comes down to having more granular data; you can know things like the training level of techs in certain regions, you can make sure parts are located near where they’re most needed, etc.)

You’ll see on this slide that Scout mentions a 50% reduced cost of retail operations as a result of this direct-sales model:

Scout Says Dealers Aren’t Enthusiastic Enough About EVs

This next slide is an interesting one. Scout said that, when it comes to launching a new brand and network, you need full engagement and enthusiasm. Apparently, there’s not enough of that going around, because — per this slide below — 81 percent of dealers don’t have EVs for sale and 50 percent of those said “they wouldn’t sell EVs regardless of inventory availability.”

Scout says its model will ensure that customer-facing representatives are all on the same company page.

This next slide is about transparent pricing. Scout mentioned how “Auto Buying is slow and cumbersome,” noting that it typically takes 13 hours and 31 minutes to buy a car these days. I’ve seen similar figures from Cox Automotive, though the number appears to include shopping. Scout’s point, I suppose, is that you won’t have to shop around, since you’ll have one simple price without hidden fees/markups, and you’ll just buy online, quickly and easily.

Scout Says Dealerships Have Broken Trust, Aren’t The #1 Go-To For Service

The next point Scout made was that dealerships have broken consumers’ trust. “Only 8 percent of consumers say they have high or very high trust in car dealers,” Thacker said, pointing to tens of thousands of FTC complaints.

One thing Scout’s VP of Growth mentioned is that Scout thinks Americans find buying and servicing their cars frustrating, noting that 31 percent of people prefer to have their cars serviced at their dealer, with more preferring independent shops. Thacker doesn’t think this should be the case. The dealer, Scout believes, should be most people’s number 1 choice.

Not Dealerships, But Studios And Workshops

The next part of the presentation was called “National Presence,” and it was about Scout building studios and workshops around the country, with an emphasis on service at the workshops.

You’ll notice that Scout plans for a quarter of all service requests to be fulfilled by “Scout Mobile Service Units” that will actually drive to the customer instead of the other way around.

Here’s a look at Scout “rooftops” planned between 2027 and 2032. Scout also says it expects 85 percent of Scout owners to be within 200 miles of one of these rooftops:

Scout then went on to show us what the actual physical Scout locations will look like.

Scout Studios

First, there’s the Scout Studio. It includes product displays and allows customers to make reservations on-site. Scout has already built a pilot studio, which focuses on the history of the Scout brand:

In the future, Scout Studios will display vehicles and accessories.

Scout Workshops

Then there are Scout Workshops. 80 percent of the workshop floor space will be work stalls for repair, with 20 percent being for customers, sales advisors, and service advisors.

Scout emphasized radical transparency, saying customers will be “located very close to [their] vehicle,” which is more appealing now that service for an electric vehicle is a fairly clean process compared with service for ICE-powered vehicles.

Scout Experience Center

The third physical Scout location is the “Scout Experience Center.” It’s not clear how many of these will exist, but there will at least be one at the factory in Blythewood, South Carolina.

The Scout Experience Center will offer sales and service support, with products displayed prominently. Scout plans to offer a factory delivery program, as well as an “off-road driving experience.”

The inside will be community-focused and comfortable, Scout said, showing this rendering:

How To Buy And Fix A Car Through Scout’s App

Scout says it’s sales and service model is “digital first,” so Stewart Dixon, Senior Director, Digital Product Management at Scout Motors, walked us through what Scout ownership should look like from the customer’s perspective.

Here’s a chart showing the interaction between the digital and physical. You’ll be able to configure the car online, but you can test drive it in person. You’ll go through an onboarding and checkout process (which goes through all the financing terms), and then you’ll take delivery in person. If you need service, you can make appointments via an app before bringing the car in (or having a mobile service unit arrive). You can also buy accessories online, make referrals (a la Tesla), while hanging out at Scout locations to make friends:

Dixon showed an example of how someone might schedule a service appointment via a digital assistant named Dean.

Notice how the digital assistant has already communicated with the vehicle to get some baseline information prior to talking with the owner:

The assistant gives the owner options to choose to attempt to diagnose the issue:

It even suggests a few solutions:

Here the digital assistant has diagnosed the issue as a window regulator failure:

And here the app gives the owner a repair estimate, an option for other overdue repairs, and the option to schedule a repair from a Mobile Service Workshop:

Here you can see when the mobile technician will arrive:

And here’s how payment happens after the repair has been completed:

How It All Comes Together

Here you can see how the Scout Digital Platform interacts with every element of Scout ownership:

And here Scout showed its service capacity, with a 136 percent compound annual growth rate between 2027 and 2032 (if I understand this right, that’s how much, on average, the service capacity is growing each year):

Bringing all this in-house, Scout says, will allow the company to share service information across all service centers. Scout thinks this could help it predict repairs, using a combination of the customer’s concern, a deep vehicle history, and a deep service history to determine what’s wrong.

You can see above that Scout anticipates that 80 percent of all repair types will be able to be done by a mobile service unit.

Here’s a breakdown of Scout warranty coverage, in case you’re interested:

And here’s Scout’s final slide on its sales/service model:

Here’s the short of the presentation:

• Scout says a direct-sales model allows it to offer a more unified brand and marketing experience marked by a “universal, consistent, high-quality customer experience.” In addition, this allows Scout “full visibility into demand tunnel.”
• The customer gets a “fast, easy, predictable buying experience” with price transparency, but still the option for local demos and product consultation.
• Scout’s locations will employ people who are excited about the product, with “full focus, enthusiasm, and expertise.” Those locations will be “right-sized [and]…highly flexible.”
• Scout says offering sales and service in-house offers cost efficiency
• Servicing will be scheduled quickly utilizing AI and OTA updates
• A single app will connect sales/service/other elements of the customer experience.
• There will be various studios for sales/demos, workshops for repairs, and availability for mobile service.

The best way to summarize it all is probably this quote by CEO Scott Keogh, as noted by Reuters:

“I think it’s critical moving into the future in unstable environments to control your customer, control your margin, control your operational excellence,” Keogh said, referring to the direct sales plan.”

There’s obviously a lot more to learn about how all this will work, especially given restrictions in certain states that ban direct-sales. Plus there’s that crazy TZEV warranty that CARB states require — is Scout ready to commit to 15 years, 150,000 miles? VW dealers aren’t thrilled to see any of this, so we’ll see how it plays out.

Top graphic images: Scout Motors; Used Cars via YouTube