Indian Automaker Mahindra Terminates Agreement with U.S. Distributor Global Vehicles

Indian automaker Mahindra & Mahindra Limited has announced that it has terminated its partnership with independent domestic auto importer, Global Vehicles U.S.A. Incorporated. The announcement came just days after Mahindra received EPA approval to begin marketing its diesel pickup trucks in the U.S.

Last March Mahindra’s president Pawan Goenka said, “Since our long-term aspiration is to be known as the premier SUV and pickup manufacturer in the world, it is but natural that we must sell and be successful in the U.S. Without that we cannot call ourselves a premier player in that segment.”

Officials with Global Vehicle were not available for comment concerning Mahindra’s termination of the four-year contract.

Global Vehicles has taken Mahindra to court in an attempt to force Mahindra to commence its U.S. operations. The company says it has invested four years and spent $35 million to position itself to serve as Mahindra’s U.S. distributor.

Between 300 and 350 U.S. retailers have signed franchise agreements with Global Vehicles to sell Mahindra’s mid-size pickups, and many of them have already procured showrooms.

Mahindra had hoped to begin selling its small-engine trucks in the U.S. in late 2009 but ran into unexpected delays in getting the safety and emissions testing and certifications needed in order to sell in the U.S. The launch was also postponed due to numerous product changes that were requested by retailers and by Global Vehicles’ CEO John Perez.

Originally scheduled for December 2009, the launch was postponed until February 2010 and then to this coming December. During a conference call with dealers last June, Perez said he was taking legal action to force Mahindra to honor the December launch timeframe.

In a statement issued last month, the company said, “Global Vehicles and its dealers stand ready, willing and able to immediately begin selling Mahindra vehicles in the United States. All Mahindra needs to do is complete homologation and start delivering them. Thus any delay in entering the United States market rests exclusively with Mahindra and can in no way be attributable to the litigation or any actions of Global Vehicles.”

Perez and Global Vehicles had originally sought to become the U.S. distributor for the Romanian-made Aero SUV but that plan was scuttled in 2006. Perez then sought out Mahindra and allowed his distributors to roll their Aero franchises into new Mahindra franchises. Global Vehicles has also added a number of new Mahindra franchisees who have reportedly paid up to $200,000 in franchise fees.

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