M&M faces lawsuit by dealers in US

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

According to Michael Diaz, managing partner of Diaz Reus & Targ, the lawfirm that is representing various dealers, the lawsuit alleges that “Mahindra duped hundreds of US auto dealers and walked away with more than US$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.

When contacted, Mahindra & Mahindra (M&M) said: “Mahindra unequivocally denies all allegations of fraud, misrepresentation and conspiracy.”

The lawsuit was filed on June 4 in the district court in Atlanta by dealerships in New Hampshire, Florida, California, New Jersey and Washington.

“Dealers across 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,” the statement said.

It further said M&M had “obtained US$9.5 million in fees from the dealers” with a promise that products from the Indian auto maker would be launched in the US by 2008.

Over the next two years, Mahindra continued to reassure the US dealers that its certification process was on target, while in fact it was delaying submitting its documentation to regulations as a pretext for terminating its agreements.