Saturday, 10 March 2012

Mahindra &Mahindra wins arbitration case in US



India's largest utility vehicle maker Mahindra & Mahindra's long pending entry into US got a major fillip , with the International Arbitration Panel rejecting the claims of the automotive dealer Global Vehicles USA which had accused the Indian automaker of violating the distribution agreement for selling vehicles in the US .

The arbitrators held that the distribution agreement with Global Vehicles (GV) had ended according to it sown terms and that Mahindra hasn't violated any agreement or law in the US in its dealings , the company said in a filing with the Bombay Stock Exchange on Friday .

Mahindra had in 2010 announced its plans to sell vehicles in the US , including a 2.2-liter , four-cylinder compact pick-up truck , a version of the Scorpio utility vehicle . But the company had to stall its plans when its Georgia-based dealer filed a suit in the US district court in Atlanta in June 2010, accusing M&M of violating a 2006 agreement that Global Vehicles would be the exclusive distributor of its vehicles in the US . Now with this court ruling , it seems the way is cleared for M&M to make a comeback in the US with a renewed strategy .

But M&M officials declined to give any further details on the roll-out plan . Mahindra also said a US court has rejected another lawsuit by a group of dealers against the company and Global Vehicles without divulging details on the same . Experts say while the entry into the US market may have got delayed , over the last two years , M&M's product portfolio has got enhanced significantly with Ssangyong under its belt and a new state-of-the-art plant in Chakan up and running , which will put M&M in a much better position .

M&M , now , has better products to offer and the requisite production capacity ; it can now re look and reexamine its growth strategy . The US market has staged a mini come-back in the last few years ; so, while it may offer a better growth opportunity to the company , the competition has geared up with more compact products ," said Mahantesh Sabarad , auto analyst with Fortune Broking .

In 2010, Global Vehicles had taken M&M to court over delay in launching its pick-up truck based on the Scorpio platform .The Indian firm had initially planned to launch its pick-up trucks in early 2009 ,but got delayed due to regulatory approval issues . The entry deadline was revised twice and then by the end of 2010 it , too, was missed .

Atlanta-based GV had claimed that it spent close to $35 million in preparation for the launch of the Mahindra vehicles in the US and had signed with as many as 360 dealers nationwide .The case was then referred to the London-based arbitration panel . M&M and Global Vehicles had entered into an agreement on September 28 , 2006 , according to which the latter became the sole distributor of the Indian company's motor vehicles in the US .

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