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| M&M sued by US partner for delaying truck launch |
| BS Reporter / Mumbai Jun 17, 2010, 00:04 IST |
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Global Vehicles USA Inc, the Atlanta-based company that had joined hands with Mahindra & Mahindra (M&M) to launch pick-up trucks in that country, has sued the latter for continuously delaying the launch.
GV USA reportedly filed the suit on Monday, in a district court in Atlanta, alleging that while it had signed up more than 350 dealers and spent more than $35 million (Rs 162 crore) in preparing for the launch, M&M lost time in getting the final safety and emission certificate. The Atlanta-based company also accused M&M of holding back information about the launch and keeping it in the dark, according to John Perez, chief executive.
M&M had signed the distribution agreement with GV in 2006. It had planned to launch its range of vehicles in the US in December 2008. However, due to repeated delay in procuring the required go-ahead from safety and emissions authorities, the launch got postponed twice.
In its suit, Global Vehicles also said dealers have spent more than $60 million (Rs 278 crore) towards franchisee fees for the right to sell Mahindra vehicles. It has also initiated arbitration proceedings against the India company.
In a statement, M&M’s spokesperson replied, "Mahindra & Mahindra (Mahindra) has learnt that Global Vehicles USA, Inc (GV) has filed a lawsuit in the US. GV has also initiated separate arbitration proceedings. Mahindra firmly believes these legal actions to be without merit and will vigorously contest these actions. As this matter is now under litigation, Mahindra would not like to comment further at this stage on these unfortunate developments."
According to a US news website, M&M is yet to file its emission certification paperwork with the Environment Protection Agency (EPA,) as stated by the latter’s spokeswoman, Cathy Milbourn. M&M had clarified earlier that it expected to get EPA certification by July.
GV has also asked the court to restrain M&M from engaging with any other dealer or distributor for retailing its range of vehicles.
Less than a month earlier, M&M reiterated its plans of launching the TR20 and TR40 pick-ups (based on the Scorpio platform) in the US market by December, with production plans for them at its facility in Chakan, Pune, starting by September.
The US foray is considered by many as one of the most ambitious targets of M&M, as it will have to jostle for space in a highly mature automotive market against top global auto makers such as Ford, Toyota, Nissan, General Motors and Mitsubishi, among several others.
M&M planned for the launch of the pick-up line first, followed by the introduction of the sports utility version of the Scorpio by December next year. Its new SUV, currently undergoing tests, was to be also launched in the US in 2012. M&M plans also included the launch of a four-door, pick-up version of the Xylo multi-utility vehicle, expected in 2012. It is also working on a gas/electric hybrid vehicle for the US market, which could be launched in 2013.
The US is the world's largest pick-up market, with annual sales of more than 13 million units. The compact truck market, where M&M will position its products, is about 240,000 units currently and is expected to grow to 300,000 units by next year, according to M&M estimates.
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