Mahindra Responsible for Delays in Delivering Trucks to U.S. Dealers

Oct 19, 2010, 16:28 ET from Global Vehicles U.S.A., Inc.

ALPHARETTA, Ga., Oct. 19 /PRNewswire/ -- Global Vehicles USA, Inc., the exclusive U.S. distributor of Mahindra pickup trucks, called on India-based Mahindra & Mahindra to begin building vehicles for sale in the United States and commit to a launch date, which would bring it back into compliance with the arbitration clause of the distribution agreement between the two companies.

"Nearly 350 dealers have been ready to sell Mahindra trucks for more than three years," said John Perez, chief executive officer of Global Vehicles. "If Mahindra executives were being truthful when they said that the trucks would be on sale by the end of the year, they should honor that commitment so dealers can start earning back the tens of millions of dollars they have invested in the brand.  

"Binding arbitration will decide if Mahindra lied to Global Vehicles and our dealers about the status of the trucks and whether they broke the law when they attempted to arbitrarily terminate our distribution contract," Perez added. "In the meantime, Mahindra is legally – and morally – obligated to conduct business as usual."

Global Vehicles believes that Mahindra improperly took advantage of an escape clause that was designed to allow both parties to walk away from the project if Mahindra was unable to achieve U.S. safety and emissions standards by June 11, 2010.  Mahindra executives communicated publicly on multiple occasions in 2009 and 2010 that the U.S. launch was on track, and the company announced in August 2010 that it had received certification from the EPA to sell the trucks.

Global Vehicles invoked the arbitration clause in the distribution contract on June 11.  Under terms of the agreement, both companies are required to continue performing their obligations under the distributor agreement while any dispute is being resolved.   The first meeting in the arbitration process was held Sept. 15 in London.

The exact contract language is quoted below:

Section 60.  Arbitration

If a dispute, controversy or claim concerning the interpretation of this Distributor Agreement, the validity of this Distributor Agreement, any breach or alleged breach by a party under this Distributor Agreement or any other matter relating in any way to this Agreement arises between the Parties, the Parties agree to resolve the dispute by using the procedures set forth in this Section 60 (which are Executive Level review, or if that is unsuccessful, Binding Arbitration).  

Except where clearly prevented by the area in dispute, both Parties agree to continue performing their obligations under the Distributor Agreement while the dispute is being resolved or until this Distributor Agreement is terminated as provided herein.

"Any suggestion that the arbitration process or the federal lawsuit we were forced to file to protect our rights are responsible for the delay in bringing trucks to the United States is patently not true," Perez said.  "If Mahindra's trucks are ready to sell, they should continue performing their obligations under the distributor agreement just like we have.  If dealers start to doubt Mahindra's integrity, they don't stand a chance of earning the trust of American consumers."

Together, Global Vehicles and the nearly 350 Mahindra dealers it recruited in 49 states have invested more than $120 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 (, a $6 billion-plus diverse conglomerate.  

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