Will Mahindra's Pik-Up ever make it to the U.S. market?
The feud over Mahindra & Mahindra’s bid to sell vehicles in the U.S. is apparently deepening – and threatening to scuttle or at least delay its long-awaited launch in the American market.
Global Vehicles USA Inc., which considers itself the exclusive U.S. distributor of Mahindra pickup trucks, called on India-based Mahindra & Mahindra to begin building vehicles for sale in the United States and commit to a launch date.
But there’s a growing likelihood that any decision over who will actually represent the Indian maker in the American market will have to be decided in court.
A firm launch date would bring the Indian-based vehicle builder back into compliance with the arbitration clause of the distribution agreement between the two companies Global Vehicles said in a statement.
“Nearly 350 dealers have been ready to sell Mahindra trucks for more than three years,” said John Perez, chief executive officer of Global Vehicles.
“If Mahindra executives were being truthful when they said that the trucks would be on sale by the end of the year, they should honor that commitment so dealers can start earning back the tens of millions of dollars they have invested in the brand.
“Binding arbitration will decide if Mahindra lied to Global Vehicles and our dealers about the status of the trucks and whether they broke the law when they attempted to arbitrarily terminate our distribution contract,” Perez added. “In the meantime, Mahindra is legally – and morally – obligated to conduct business as usual,” the statement said.
However, Mahindra & Mahindra appears determined to use technicalities to skirt what has the potential to becomef an ugly legal morass that could effectively prevent the company from exporting vehicles to the U.S.
Global Vehicles charged that Mahindra improperly took advantage of an escape clause that was designed to allow both parties to walk away from the project if Mahindra was unable to achieve U.S. safety and emissions standards by June 11, 2010.
Mahindra executives communicated publicly on multiple occasions in 2009 and 2010 that the U.S. launch was on track, and the company announced in August 2010 that it had received certification from the EPA to sell the trucks.
Meanwhile, Global Vehicles invoked the arbitration clause in the distribution contract on June 11 the original contract would have expired because Mahindra had yet to finalize plans for the U.S. market because of a dispute with regulators in the U.S.
Under terms of the original agreement, Mahindra and Global Vehicles are required to meet any obligations under the distributorship arrangement while any dispute is being resolved via arbitration process included in the contract.
Arbitrators met with both parties last month for the first time in London, which is considered ground friendly to Mahindra’s interests.
In the meantime, at least some of the potential U.S. dealers that Global Vehicles lined up for the Mahindra network appear to be reaching the limits of frustration. In suburban Detroit, for example, the former Mt. Clemens Dodge showroom has finally taken down a large sign indicating it would soon begin representing Mahindra. Instead, the facility has taken on the Kia franchise. Indications are that a number of other once-interested dealers are or will soon walk away, as well, creating challenges for whomever wins the Mahindra arbitration battle.