Volkswagen (VWAGY) plans to revive the iconic Scout brand in the U.S. as it seeks a larger share of the world’s most profitable auto market. According to a Wall Street Journal report, it plans to build an electric Scout-branded SUV and pickup truck.
The Scout is an off-road vehicle model that launched in 1960 and became a major competitor to Jeep, Land Rover, and the Ford Bronco. Its production stopped in 1980. The Scout still has many fans, and Volkswagen hopes to build on that popularity as it works to grow its share of the U.S. auto market, especially in the electric segment.
Scout Production to Begin in 2026
According to a Wall Street Journal report, Volkswagen aims to begin production of the electric Scout models in 2026. Just like the Audi, Bentley, and Porsche brands, Scout would operate as a standalone Volkswagen subsidiary with its own management team. It would have its manufacturing facilities in the U.S. The company hopes to sell as many as 250,000 Scout vehicles annually in the U.S.
Although it is big globally, Volkswagen has a limited presence in the U.S. with less than 5% market share. However, the electric segment has been a bright spot for Volkswagen in the U.S., with the company claiming to control about 8% of the U.S. EV market—placing it second only to Tesla (TSLA) in the category market share.
Demand for Volkswagen’s electric models is so strong that the vehicles have sold out in the U.S. and Europe in 2022. According to CNN Business, in Western Europe alone, the company sits on a backlog of 300,000 EV orders.
Scout IPO
Volkswagen would initially invest $1 billion in the Scout project and bring in outside investors at a later stage to provide additional financing. Once the business is established, Volkswagen could take it public.
Smart Score
According to TipRanks’ Smart Score system, Volkswagen gets a four out of 10, which indicates that the stock is likely to perform in line with market averages.
Wall Street’s Take
The stock has a Hold consensus rating based on one Hold. Berenberg Bank analyst Adrian Yanoshik initiated a Hold rating on the stock, with a price target of $184.3, which implies a whopping 817.7% upside potential to current levels.
Key Takeaway for Investors
It seems that there is ample time before Volkswagen’s electric Scout models hit the market. However, the iconic brand has the potential to supercharge Volkswagen’s EV sales, especially considering that SUVs and pickup trucks are among the top-selling vehicle categories in the U.S.
Furthermore, amid uncertainty in Europe because of the war in Ukraine and China’s COVID-19 crisis, it may serve Volkswagen to bid for a bigger presence in the U.S.
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