Re: Mahindra - Rise.
A clutch of automobile dealers from United States of America have filed a lawsuit against Mahindra & Mahindra and its U.S. counterpart alleging the company of resorting to fraud, misrepresentation and conspiracy on June 4.
A press release posted on prnewswire.co.insaid, the lawsuit alleges that Mahindra duped hundreds of U.S. auto dealers and walked away with more than $60 million in cash and trade secrets. Then Mahindra simply reneged on its promises, according to attorney Michael Diaz, the managing partner of Miami-based Diaz Reus & Targ, who leads the plaintiffs' legal team of Gary Davidson, Brant Hadaway, Carlos Gonzalez and Sumeet Chugani.
A statement issued by Mahindra & Mahindra on Wednesday said, "Mahindra unequivocally denies all allegations of fraud, misrepresentation and conspiracy."
Referring to the law suit filed on June 4, statement said, "We cannot comment on this as the matter is in the courts," however added, "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."
The mass tort lawsuit was filed in U.S. District Court in Atlanta on June 4, 2012 against Mahindra & Mahindra, Ltd, and Mahindra USA, Inc. by dealerships in New Hampshire, Florida, California, New Jersey, and Washington.
"Mahindra told the dealers that its light trucks and SUVs were ready for delivery to the U.S. market," said Diaz. "However, Mahindra intentionally delayed certification of its vehicles after obtaining the dealership fees and trade secrets, and began pursuing other partners in the U.S. and elsewhere in clear violation of their commitments."
Dealers across the country paid initial dealership fees, undertook marketing on Mahindra's behalf, built Mahindra showrooms, display platforms and showcases, and hired additional personnel, all at Mahindra's urging, according to the lawsuit.
"Through their false representations, the defendants lured the U.S. dealers into making investments and promoting Mahindra's brand name," said Diaz
According to the lawsuit, M&M began laying the groundwork to enter the US market and build nationwide dealer network in 2004. And the official of the company provided a set timeline for Mahindra's four door truck to the US at the end of 2008 and Mahindra's two-door truck and SUV in the third quarter of 2009.
Over the next two years, Mahindra continued to reassure the U.S. dealers that its certification process was on target, while in fact it was delaying submitting its documentation to regulators as a pretext for terminating its agreements, Diaz added.
"Mahindra repeatedly failed to live up to its obligations," Diaz explained. "Now, after spending millions of dollars on behalf of Mahindra, the U.S. dealers have nothing to show for their time and energy other than a series of false promises."
Mahindra & Mahindra continues to sell tractors through its subsidiary in US and has a decent market share of 5-10% in certain markets, but its utility vehicles and pick up truck roll out has been constantly mirred in legal wrangles.
And it seems the pick up trucks which it had developed for the US market may no more meet the stringent regulatory requirements of today.
It's really sad to see company like Mahindra handling this whole fiasco in an unprofessional manner.