Mahindra & Mahindra’s attempt to launch in the US has hit a roadblock with potential dealers claiming they have been duped out of millions of dollars by the company.
Dealers have filed a lawsuit against the Indian automaker, accusing it of fraud, misrepresentation, and conspiracy. The lawsuit alleged that M&M duped hundreds of dealers and walked away with over US$60m in cash and trade secrets.
They allege that they paid initial fees, undertook marketing on Mahindra's behalf, built showrooms, display platforms and showcases and hired additional personnel.
According to attorney Michael Diaz, the managing partner of Miami-based Diaz Reus & Targ, who is leading the plaintiffs' legal team, the company then "simply reneged on its promises".
He claimed Mahindra told dealers its light trucks and SUVs were ready for delivery to the US market but added that the Indian company intentionally delayed certification of its vehicles after obtaining the dealership fees and trade secrets, and began pursuing other partners in the US and elsewhere “in clear violation of their commitments”.
M&M, however, has already won a lawsuit filed against it by importer Global Vehicles of Atlanta in March whose claims of violating a distribution pact were dismissed.
Mahindra said it could not comment because the matter was in the courts but said in a statement: “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.
“In a separate related development, an international arbitral tribunal has in February 2012 dismissed similar allegations and claims against Mahindra made by Global Vehicles.”