Mahindra shelves development of vehicle for US market

Following legal disputes and failure to win needed certification

Auto major Mahindra & Mahindra has shelved the development of a vehicle meant for the US market citing regulatory issues and market situation.

"Since 2006, M&M has been working on the development of a vehicle for the US market. However, it recently decided not to proceed further with the project due to changes in the US regulatory and market situation," the company said in a statement.

The company will continue to monitor the US situation and remain flexible with its approach to this market, it added.

The auto major had planned to enter the utility vehicles market in the US around 2008-09 but ran into problems with erstwhile exclusive distributor Global Vehicles dragging it to court over delay in launch of pick-up truck based on the Scorpio platform.

Earlier in June this year, a group of automobile dealers in the US had filed a lawsuit against M&M, accusing fraud, misrepresentation and conspiracy that the Indian firm denied.

According to the lawsuit, "Mahindra duped hundreds of US auto dealers and walked away with more than $60 million in cash and trade secrets".

It further said M&M had "obtained $9.5 million in fees from the dealers" with a promise that products from the Indian auto maker would be launched in the US by 2008.
M&M had said it planned to launch its pick-up trucks in the US in early 2009, but got delayed due to regulatory issues. The entry deadline was revised twice and then to end of 2010, which too was missed.

In March this year, M&M had said an international arbitration panel ruled in its favour in the case against GV, the firm that was to sell its vehicles in the US.

Atlanta-based GV had claimed that it spent close to $35 million in preparation for the launch of the Mahindra vehicles in the US and had signed with as many as 360 dealers nationwide.

The case was then referred to the London-based arbitration panel.
M&M and GV had entered into an agreement on September 28, 2006, according to which the latter became the sole distributor of the Indian company's motor vehicles in the US.