Mahindra Rejects Valid $35 Million Order and Flouts the Arbitration Process in Dispute with Global Vehicles

ALPHARETTA, Ga., Sept. 28 /PRNewswire/ -- Indian company Mahindra and Mahindra has improperly rejected a valid $35 million-plus factory order placed on Sept. 24 for U.S.-spec Mahindra pickup trucks, exclusive U.S. distributor Global Vehicles U.S.A., Inc. confirmed today.

"Global Vehicles and its dealers remain willing, ready and able to begin the sale of Mahindra vehicles as soon as they can be delivered," said Global Vehicles CEO John Perez.  "We placed this substantial order in good faith because we want to get down to business and so do our dealers."  

Mahindra issued a statement in India yesterday confirming that it rejected the order.  But the company has not explained its motives for breaking the contract, especially its arbitration clause.  

"Our contract with Mahindra requires disputes to be taken to arbitration and both parties are obligated to conduct 'business as usual' until there is a ruling," said Perez.  "We initiated arbitration before Mahindra claims the contract expired and they should not disrespect the process and break the law by continuing to act in bad faith."

In addition to initiating arbitration, Global Vehicles is pursuing claims against Mahindra in U.S. Federal District Court to protect is contractual rights.

"We're grateful that this country has strong contract laws and statutes that protect big car companies from steamrolling their dealers and distributors," Perez said.  "We're confident in our position because it's simple and it's the truth, and we look forward to hearing Mahindra's sworn testimony."  

Global Vehicles believes that Mahindra purposely delayed the EPA certification process so it could invoke a contract clause that would allow it to walk away if the trucks could not be certified for sale in the United States. Global Vehicles extended the deadline for certification three times, with the latest deadline set at June 11, 2010.

Mahindra submitted its certification paperwork to the EPA about 10 days after the June 11 deadline, and announced in an Aug. 20 press release that its vehicles were certified for sale.

Mahindra demanded the clause at the eleventh hour before the contract was signed in 2006 because it expressly wanted to limit its losses if the trucks could not be certified for sale here.  Earlier this year, well before the June deadline, Global Vehicles asked Mahindra to remove the clause because it was no longer applicable and they refused.  Global Vehicles later asked Mahindra for another extension but was again refused.

Together, Global Vehicles and the nearly 350 Mahindra dealers it recruited in 49 states have invested almost $100 million to bring the rugged, affordable and fuel-efficient trucks to the United States.

Global Vehicles U.S.A., Inc., based in Alpharetta, Ga., is the exclusive importer and distributor in the United States of motor vehicles produced by the automotive arm of the Mahindra Group (www.mahindra.com), a $6 billion-plus diverse conglomerate.  

SOURCE Global Vehicles U.S.A., Inc.