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Global Vehicles sues Mahindra for delay in US launch

Global Vehicles sues Mahindra for delay in US launch
PTI
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First Published: Wed, Jun 16 2010. 03 07 PM IST
Updated: Wed, Jun 16 2010. 03 07 PM IST
Washington: Automaker Mahindra & Mahindra’s exclusive American distributor has filed a lawsuit against the company for taking too long to launch its pick-up truck in the country.
Atlanta-based Global Vehicles (GV), Mahindra & Mahindra’s (M&M) sole distributor in the US, in the lawsuit filed before an Atlanta District Court, alleged that there has been inordinate delay in the launch of the truck.
M&M and GV entered into a pact in September 2006 and Mahindra proposed to launch the pick-up truck, based on its SUV Scorpio platform, in 2009. However, this got delayed over regulatory clearances.
The company set a revised target of entering the US market by the beginning of this fiscal year, which was later postponed to end of 2010.
In its lawsuit filed on 14 June, GV said it spent close to $35 million in preparation for the launch of the Mahindra vehicles in the US and had signed with as many as 360 dealers nationwide.
This also includes an initial distribution appointment fee of $8.5 million.
GV also said the US dealers have spent more than $60 million in franchisee fees for the right to sell Mahindra vehicles. It has also initiated arbitration proceedings against M&M.
Reacting to the development, an M&M spokesperson said: “Mahindra & Mahindra has learned that GV has filed a lawsuit in the US. GV has also initiated a separate arbitration proceedings. Mahindra firmly believes these legal actions to be without merit and will vigorously contest these actions.”
GV has also asked the court to prevent M&M from selling its vehicles through any other dealer or distributor.
On whether the lawsuit will further delay launch of its vehicle in the US, the M&M spokesperson said: “Mahindra remains committed to launching its products in the US market.”
She, however, did not elaborate stating “this matter is now under litigation, Mahindra would not like to comment further at this stage on these unfortunate developments”.
Earlier, explaining the delay in the launch of the product, M&M president (Automotive and Farm Equipment) Pawan Goenka had said it was because of changes made to the vehicle to conform to US regulations and meet American tastes.
“We wanted to give the best product to the American consumer and thereby wanted to be absolutely sure on all parameters before its launch,” he had said.
He had stated M&M expected to get certification from the US Environmental Protection Agency by July this year and would begin production in India in mid-September and the trucks would arrive in US showrooms by late December.
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First Published: Wed, Jun 16 2010. 03 07 PM IST