Mahindra sued by US auto dealers for fraud, misrepresentation and conspiracy

Thursday 07 June 2012, 11:46 AM by

India's leading Sports Utility Vehicle (SUV) manufacturer Mahindra & Mahindra (M&M) is facing a law suit from a group of automobile dealers based in the US. The company has been charged with fraud, misrepresentation and conspiracy, which it has vehemently denied.

As per Michael Diaz, Managing Partner, Diaz Reus & Targ, his firm has filed a case against M&M on behalf of several auto dealers. According to the law suit, the Indian company misled hundreds of auto dealers located in the US and took off with over US$ 60 million worth of cash and trade secrets.

Diaz stated, "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."

Responding to a query on this matter, M&M commented, "Mahindra unequivocally denies all allegations of fraud, misrepresentation and conspiracy." However, it refused to comment further, saying that "the matter is in the courts."

This law suit against the company was filed in the district court in Atlanta by dealerships located in New Hampshire, Florida, California, New Jersey and Washington on June 04, 2012. According to a statement, "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." This release also said that the affected dealers paid US$ 9.5 million as fees to the Indian manufacturer, which promised them that it will roll out its products by 2008.

For the next couple of years, M&M continually told the dealers that the certification process was going as per schedule, even though it was purposefully delaying the submission of the requisite documentation to the regulatory authorities in order to back out of its agreements.

Diaz Reus & Targ also stated that "Mahindra repeatedly failed to live up to its obligations. Now, after spending millions of dollars on behalf of Mahindra, the US dealers have nothing to show for their time and energy other than a series of false promises."

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