The Indian automotive giant, Mahindra & Mahindra has postponed the development plan of a vehicle, which was specifically being designed for the US auto market. Reportedly, the car maker has attributed the shelving to the changes in regulatory norms and market situation of the country.
In a statement, the company officials said, “Since 2006, M&M has been working on the development of a vehicle for the US market. However, it recently decided not to proceed further with the project due to changes in the US regulatory and market situation.”
However, the company statement further added that it would closely watch the market trend of the country and would modify its plans accordingly. In order to establish itself in the US auto market, M&M and GV inked a legal agreement on 28th September, 2006, by which the latter emerged as the solitary distributor in US.
Initially the company had decided to enter the Utility Vehicles (UV) segment of US sometime in 2008-2009, but had to face some unfavourable issues with Global Vehicles (GV), the exclusive distributor. At that time, the auto maker was forced to go to the court because of some delays in the launch of a pick-up truck, which was designed on the platform of Scorpio. Commenting on the situation, the company said that it had planned the launch during the start of 2009, but failed to do because of some regulatory problems. Though the deadline was extended two times, the company was not able to meet the same till the end of 2010.
In March 2012, the auto maker said in a statement that a global negotiation committee responded in favour of the company, when it was blamed by GV. During June 2012, M&M was sued by a section of US auto dealers, which accused the Indian auto maker of fraud, misrepresentation and conspiracy, which it denied vehemently. As per a lawsuit, “Mahindra duped hundreds of US auto dealers and walked away with more than $60 million in cash and trade secrets.” The lawsuit further added that M&M had “obtained $9.5 million in fees from the dealers” with an assurance that the models from Indian market will be introduced in the country by 2008.
GV is an Atlanta based company, which alleged that it spent around $35 million in welcoming Mahindra vehicles in the US and it had also signed an agreement with almost 360 dealers throughout the country for the same. After the appeal of GV, the case then moved to the London-based arbitration committee.
