Monday, November 29, 1999

Mahindra``s American distributor sues over delay in US launch

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Lalit K Jha Washington, June 16 (PTI) With Indian conglomerate Mahindra & Mahindra missing two deadlines since 2009 to launch its pick-up truck in the US, the automaker''s exclusive American distributor has slapped a lawsuit against the company. The company has set a revised target of entering the US market by end of 2010. Atlanta-based distributor Global Vehicles (GV), in the lawsuit filed before an Atlanta District Court, alleged that there has been inordinate delay in the launch of the truck, based on M&M''s Sports Utility Vehicle Scorpio platform. 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." M&M and GV entered into a pact in September 2006 and Mahindra proposed to launch the pick-up truck in 2009. However, this got delayed over regulatory clearances and it revised the entry deadline to beginning of this fiscal year, which too was missed. In its lawsuit filed on June 14, GV said that it spent close to USD 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 USD 8.5 million. GV also said that the US dealers have spent more than USD 60 million in franchisee fees for the right to sell Mahindra vehicles. It has also initiated arbitration proceedings against M&M. 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." GV has also asked the court to prevent M&M from selling its vehicles through any other dealer or distributor. 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 that 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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