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US auto dealers sue Mahindra & Mahindra over diesel pickup and SUVs

A group of US automobile dealers filed a lawsuit (Case 1:12-cv-01935-TWT) on 4 June with the United States District Court, Northern District Of Georgia, Atlanta Division accusing the Indian truck manufacturer Mahindra & Mahindra, Ltd. and its US counterpart of fraud, misrepresentation, and conspiracy. The lawsuit alleges that Mahindra duped US auto dealers with promises of diesel light trucks and SUVS (earlier post) and then walked away with more than $60 million in cash and trade secrets.

Mahindra told the dealers that its light trucks and SUVs were ready for delivery to the US market. 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.

—attorney Michael Diaz, the managing partner of Miami-based Diaz Reus & Targ

The mass tort lawsuit was filed in U.S. District Court in Atlanta (#KH199170-3) against Mahindra & Mahindra, Ltd, and Mahindra USA, Inc. by dealerships in New Hampshire, Florida, California, New Jersey, and Washington. 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.

Mahindra obtained $9.5 million in fees from the dealers, according to the lawsuit. For two years following, Mahindra continued to reassure the US 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, according to Diaz.

In a statement on its website, Mahindra & Mahindra said that it 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.

In a separate related development, an International Arbitral tribunal has in February 2012 dismissed similar allegations and claims against Mahindra made by Global Vehicles. Mahindra is in the process of enforcing that arbitration award.

Mahindra unequivocally denies all allegations of fraud, misrepresentation and conspiracy.

—Mahindra statement



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