Uncle Sam Blues: Mahindra gets sued by its US Distributor

Mahindra PIK UP

In India, delays in much anticipated car launches usually ends up with the manufacturer garnering more bookings even as car buyers prepare to get exasperated with long waiting periods. In the Uncle Sam country, it doesn’t seem to work that way. Mahindra seems to have delayed the launch of the Scorpio Pick up inordinately and this has most certainly rubbed it’s US distributor the wrong way. Ergo, we have the Global Atlanta-based Global Vehicles, M&M’s sole distributor in the U.S, filing a lawsuit against Mahindra & Mahindra, accusing Mahindra of inordinately delaying the launch of the Scorpio Pick Up.

Indian auto major Mahindra & Mahindra signed an agreement with Global Vehicles on 28th September 2006 and since then, planned to launch the Scorpio Pick Up in 2009. Due to a delay in obtaining regulatory clearances in the US, the launch was postponed to mid 2010. A further delay saw the launch being postponed yet again to end 2010. This seems to have not gone too well with Global Vehicles who has claimed to have spent close to U.S. Dollars 35 million in preparation for the launch of the Mahindra vehicles in the US and had signed up with as many as 360 dealers nationwide. This is the major bone of contention along with the $60 million that the US dealers have incurred in terms of franchisee fees for the right to sell Mahindra vehicles.

To recover this sum, Global Vehicles has also initiated arbitration proceedings against the Indian major. Also, the lawsuit seeks to stop Mahindra from allowing any other distributor sell it’s products in the US market. This legal tangle could be yet another debilitating shot at Mahindra, further delaying the Scorpio based Pick Up even as Dr Pawan Goenka, for his part insisted that the Scorpio Pick Up was well within course for a December 2010 American launch. Mahindra, meanwhile has strongly denied all charges made against it by Global Vehicles and has even hinted legal action against the latter. Watch this space as we track how this big story pans out in the coming days.

News Courtesy: The Hindu

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