Monday, November 29, 1999

US distributor sues M&M over delay in truck launch

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Mahindra & Mahindra (M&M)'s US entry has hit a roadblock once again. The company's sole distributor in the region—Atlanta-based Global Vehicles (GV) — has filed a lawsuit against the company for taking too long to launch its pick-up truck in the US.An M&M spokesperson said: "Mahindra & Mahindra (Mahindra) has learned that Global Vehicles USA, Inc, (GV) has filed a lawsuit in the U.S. GV has also initiated separate arbitration proceedings. Mahindra firmly believes these legal actions to be without merit and will vigorously contest these actions."GV filed the lawsuit before an Atlanta District Court, alleging that there has been an inordinate delay in the launch of the truck.M&M and GV entered into a pact in September 2006. Mahindra proposed to launch the pick-up truck, based on its SUV Scorpio platform, in 2009. However, this got delayed over regulatory clearances.In the suit filed on June 14, GV said that it spent close to $35 million in preparation for the launch 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 that 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. GV has also asked the court to prevent M&M from selling its vehicles through any other dealer or distributor.Meanwhile, M&M has re-affirmed its plans to launch the pick-up truck in US. "Mahindra remains committed to launch its products in the US market."The company however did not share more details on the future course of action. "As 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, Pawan Goenka, president (automotive and farm equipment sector), M&M, had said it was because of changes made to the vehicle to conform to USregulations and meet American tastes.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.

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