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, M&M's sole distributor in the U.S. filed the lawsuit before an Atlanta District Court, alleging an 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, 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 June 14, GV said that it spent close to U.S. Dollars 35 million in preparation for the launch of the Mahindra vehicles in the U.S. Dollars and had signed with as many as 360 dealers nationwide.
This also includes an initial distribution appointment fee of U.S. Dollars 8.5 million.
GV also said that the US dealers have spent more than U.S. Dollars 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 that Mahindra firmly believes these legal actions to be without merit and will vigorously contest them.
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 the launch of its vehicle M&M spokesperson said that Mahindra stills remains committed to launching its products in the U.S. market.
Earlier, explaining the delay in the launch of the product, M&M President (Automotive and Farm Equipment) Pawan Goenka 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."
Goenka said that M&M expects to get certification from the U.S. 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.
