Wednesday, 6 June 2012

US Auto dealers file lawsuit against Mahindra for walking away with more than $60 million in cash and trade secrets.




A group of automobile dealers in the US has filed a lawsuit against Mahindra & Mahindra, accusing fraud, misrepresentation and conspiracy, which the firm has denied.

According to Michael Diaz, managing partner of Diaz Reus & Targ, the law firm that is representing various dealers, the lawsuit alleges that "Mahindra duped hundreds of US auto dealers and 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 US and elsewhere in clear violation of their commitment," Diaz said in a statement.

A press release posted on prnewswire.co.insaid, the lawsuit alleges that Mahindra duped hundreds of U.S. auto dealers and walked away with more than $60 million in cash and trade secrets. Then Mahindra simply reneged on its promises, according to attorney Michael Diaz, the managing partner of Miami-based Diaz Reus & Targ, who leads the plaintiffs' legal team of Gary Davidson, Brant Hadaway, Carlos Gonzalez and Sumeet Chugani.

The mass tort lawsuit was filed in U.S. District Court in Atlanta on June 4, 2012 against Mahindra & Mahindra, Ltd, and Mahindra USA, Inc. by dealerships in New Hampshire, Florida, California, New Jersey, and Washington. 

"Mahindra told the dealers that its light trucks and SUVs were ready for delivery to the U.S. market," said Diaz. "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." 

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. 

"Through their false representations, the defendants lured the U.S. dealers into making investments and promoting Mahindra's brand name," said Diaz 

According to the lawsuit, M&M began laying the groundwork to enter the US market and build nationwide dealer network in 2004. And the official of the company provided a set timeline for Mahindra's four door truck to the US at the end of 2008 and Mahindra's two-door truck and SUV in the third quarter of 2009. 

Over the next two years, Mahindra continued to reassure the U.S. 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, Diaz added. 

"Mahindra repeatedly failed to live up to its obligations," Diaz explained. "Now, after spending millions of dollars on behalf of Mahindra, the U.S. dealers have nothing to show for their time and energy other than a series of false promises." 

Mahindra & Mahindra continues to sell tractors through its subsidiary in US and has a decent market share of 5-10% in certain markets, but its utility vehicles and pick up truck roll out has been constantly mirred in legal wrangles. 

And it seems the pick up trucks which it had developed for the US market may no more meet the stringent regulatory requirements of today.

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