Mahindra Sued by its US Importer

By Chris Haak

This can’t be seen as good news for the prospects for Mahindra’s much-anticipated India-built small pickup reaching US shores this year, or perhaps anytime.  We’ve been covering the saga of Mahindra’s US launch for some time, with our last entry on May 10 talking about how the vehicles have passed their federal certifications and that the parent company just had to file the paperwork and launch the trucks.

Now, this story has taken another turn. According to Automotive News [sub required], Global Vehicles is now suing Mahindra for breaching its 2006 agreement to provide it with vehicles for sale.  According to the lawsuit filed on June 14, Global Vehicles twice submitted purchase orders for Mahindra vehicles that were rejected by the Mumbai-based company.

The lawsuit asks an Atlanta district court to compel Mahindra to produce the vehicles that Global Vehicles ordered, and to prevent Mahindra from importing its trucks into the US through any other distributor.  In its lawsuit, Global Vehicles accused Mahindra of acting in bad faith by entering into drawn-out negotiations for the services required to homologate the vehicles for sale in the US.  According to Global Vehicles, five years has been an excessive amount of time to complete tasks that typically take no more than three years to complete.

It’s hard to see a happy ending from this scenario.  Global Vehicles has signed up hundreds of dealers anxious to sell these small diesel pickups, yet has been waiting, hat-in-hand for years with no products to sell, only promises and sporadic updates from Mahindra in India.  Meanwhile, Mahindra can’t be thrilled at the prospect of its exclusive US distributor suing it to hurry up and get it some vehicles for sale.  If the court sides with Mahindra, expect the Indian commercial-vehicle manufacturer to quickly move to sign a new US distributor – or to give up on the US market.  Fallout from a Global Vehicles-Mahindra split would also likely include dozens of lawsuits from dealers who signed up with Global Vehicles to sell the trucks, and now have dealerships with no product to ever sell.

Should Global Vehicles prevail, it seems unlikely that Mahindra would be able to expedite its timeline to bring the small pickup (and eventually, its Scorpio SUV) to the US, so expect some sort of settlement that either compensates Global Vehicles for the delay, or pays Global Vehicles to go away and allows Mahindra to select a new US distributor.  All of this would have been preventable had Mahindra just gotten its act together to sell the pickups earlier.