By Amrita Nair-Ghaswalla
FROM DECEMBER last, pickup trucks from Mahindra & Mahindra Ltd (M&M) should have been rolling across the US. But the company is in a bitter court battle with its US importer and distributor, Global Vehicles USA Inc, which had placed a $35 million order with it four years ago.
In June this year, Global Vehicles sued M&M for violating delivery commitments. It claimed it had lined up 350 dealers to sell the trucks, its dealer network investing nearly $100 million. In the company’s estimate, annual sales could have hit $1.4 billion in four years. M&M insists the relationship has ‘expired’ whereas a senior M&M official said the major irritant was Global Vehicles’ decision to go into litigation. He said John Perez, CEO of Global, had implied that M&M was seeking to evade its contractual responsibilities.
Replying to an email questionnaire, Perez said, “We are proud of the sales and service network we created to support the launch of Mahindra vehicles, and we look forward to bringing American buyers something truly unique in the marketplace — rugged, high-quality, clean diesel pickup trucks that can achieve nearly 30 miles per gallon.” He expressed confidence that Global Vehicles would prevail in the pending arbitration hearings and court proceedings that the company had initiated “to force Mahindra to honour the terms of the distribution contract.’’
According to Abdul Majeed of Pricewaterhouse Coopers, the pickup truck market in North America is the world’s most developed and competitive, and to survive one had to be as good as the Japanese and the South Koreans. Further, to be ranked as a global OEM (original equipment manufacturer), a firm presence in the North American market is vital.