Indian carmaker Mahindra & Mahindra has said it will “make other arrangements for distribution” to dealers in the US and has rejected what it called an “invalid order” for pick-up trucks from “former distributor” Global Vehicles USA.
The difficulties between the Indian carmaker and the US distributor, both currently involved in a lawsuit launched in July this year by Global Vehicles, took a vituperative turn this week with Mahindra describing the order for pick-ups as part of “Global Vehicles' continued attempt to manipulate the press to damage Mahindra's reputation” and engage in “PR theatrics”.
The carmaker has said it will be contacting US dealers to make other arrangements for distribution for the TR20 and TR40 pick-ups, precisely what the lawsuit taken by Global Vehicles is seeking to prevent.
“Mahindra's goal remains to bring its vehicles to the US market, satisfying the desires of US consumers and dealers alike,” said PN Shah, chief executive of Mahindra’s International division, Automotive & Farm Equipment sector, in the statement.
Global Vehicles alleges that Mahindra has twice missed deadlines to launch its Scorpio SUV and pickups in the US despite Global Vehicles having spent nearly $35m in signing up around 350 dealers. Those dealers are reported to have collectively spent $60m on franchise fees and built dedicated showrooms for the brand. The companies originally promised to have trucks in those showrooms at the beginning of 2009 but they have yet to arrive.
Mahindra’s announcement in August that it has terminated its four-year contract with Global Vehicles import and distribution was refuted as “inaccurate” by the Georgia-based company distributor at the beginning of the month.
In a statement released earlier this month Global Vehicles said: “While it is true Mahindra attempted to terminate the exclusive Distributor Agreement with Global Vehicles after Global Vehicles filed an arbitration demand seeking to compel Mahindra to deliver vehicles to its dealers, such attempted termination is invalid under applicable laws of the United States and the State of Georgia, something which Mahindra continues to disregard.”
The company intends to go ahead with the launch of the vehicles in December this year, though it is increasingly difficult to see how this can proceed with any stability given the breakdown in the relationship between the two companies and the likely duration of the lawsuit.
During rosier times in the relationship, Mahindra had even planned to assemble the trucks from knockdown kits in Ohio. The impact of the economic crisis on vehicle sales in the US, however, led to a decision taken between the two companies to import them as finished vehicles from India despite the 25% import duty.
Questions over whether these will be ro-ro or containerised imports remain and a Mahindra spokesperson was unable to confirm either this or whether the vehicles would be shipped from the port of Mumbai or from Mundra.
Mahindra has sold tractors in the US since 1994, mainly commercial-sized for small farmers and lawns, as opposed to the industrial-sized combines that are often transported by ro-ro.