Bizzarro World: Mahindra Contract Cancellation
Diesel trucks are delayed…again!
Mahindra & Mahindra’s plans to bring its TR20 and TR40 compact pickup trucks to the United States have hit yet another snag, casting doubt as to whether Americans will ever see these diesel-powered vehicles.
Reports surfacing earlier this week revealed that Indian automotive manufacturer Mahindra has unilaterally cancelled its agreement with its American distributor, Global Vehicles U.S.A., Inc. (GV), to sell its trucks through the dealer network assembled by GV. That action, which seems entirely illegal, will likely force GV to respond by making sure that the trucks stay out of the states until the matter is resolved. If Mahindra does not back down, it could be years—if ever—before a single Mahindra truck is sold stateside.
Unilateral Termination
On Thursday, Automotive News reported the following statement posted to Mahindra’s website: “Mahindra’s relationship with Global Vehicles Inc (GV) has ended, the agreement dated 26th September 2006 between Mahindra and GV having terminated.”
That statement compromised in entirety a press release (or note) issued by Mahindra on August 20, 2010, but only discovered this week. GV was not notified directly nor were the 300 plus dealers-in-waiting. Mahindra received EPA certification for its vehicles earlier this month with plans to begin selling their pickup trucks in the United States this December.
U.K. Lawsuit
Mahindra and GV have been preparing to do battle in a UK court with GV having sued Mahindra to make sure that the Indian automaker follows through on its plans. The thrice-delayed Mahindra trucks were initially supposed to have been sold in the United States summer 2009, but Mahindra had to make modifications to its vehicles first and then seek EPA approval. In the meantime, GV lined up a dealer network across the United States with each dealer having paid $200,000 to join.
Mahindra’s actions have apparently caught everyone off-guard as the automotive press corps is trying to sort through the latest news. However, India’s Business Standard Motoring publication has offered a glimpse of the legal wrangling sure to follow, quoting GV’s communication manager, Max Butler, as saying, “They have to obey US law and can’t arbitrarily dismiss a contractual agreement.”
Lesson Needed
And that statement by Butler is true. Mahindra needs a fast lesson in understanding the way business is conducted in the United States if it ever hopes to sell its line of passenger vehicles here. Seems like a major PR disaster is unfolding before our eyes!
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