Former United States dealers sue Mahindra

Mahindra’s trouble in the United States just seems to have gotten amplified further. The automaker is now being sued by US dealers who were supposed to sell Mahindra’s passenger vehicle range before the firm’s US foray came a cropper due to a lawsuit filed against it by Global Vehicles, it’s then US distributor. While the lawsuit, which went into arbitration was ruled in favor of Mahindra, new legal trouble seems to be brewing for the Indian automaker as the dealers have now filed a lawsuit, alleging that Mahindra caused them losses due to it going slow on the US market foray.

Mahindra TR40 Pick Up used as an illustration

The dealers are alleging that Mahindra duped them of about $60 million. Their contention revolves around the fact that many dealers invested considerable sums of money to develop new dealerships along with hiring personnel to run these dealerships, which were to sell Mahindra’s range of passenger vehicles. Also, Mahindra is said to have allegedly accepted deposits of about 9.5 Million USD from the dealers towards fees. Lawsuits have been filed by former Mahindra dealers in New Hampshire, Florida, California, New Jersey and Washington.

Mahindra for its part is vehemently denying these allegations, citing that Global Vehicles was responsible for appointing dealers and that it was Global Vehicles and not Mahindra, which dealt with US dealers. Here’s a statement emanating from Mahindra,

Mahindra unequivocally denies all allegations of fraud, misrepresentation and conspiracy. We cannot comment on this as the matter is in the courts, but we would like to state that some dealers had earlier filed a suit against Mahindra and Global Vehicles in the US District Court in Missouri. The Missouri Court dismissed all claims against Mahindra in that suit. Significantly, the Missouri Court also ruled that Mahindra could not be held liable for any action of Global Vehicles with respect to its dealers.

Mahindra already has a presence in the US market, where it sells its tractor range. However, the automaker’s foray into the passenger vehicle space has been hit by a series of setbacks. First, it was the low EPA fuel economy numbers that threw a spanner in Mahindra’s works. Later, the automaker had a legal battle to contend with, which was ruled in Mahindra’s favor after arbitration proceedings. Now, this latest lawsuit could further slow down Mahindra’s plans to launch the TR40 pick up in the US market.