Mahindra franchisees in the dark after British ruling against U.S. distributor
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A ruling by a British arbitration panel appears to negate more than 300 Mahindra franchises across the United States by pronouncing the contract between Mahindra & Mahindra Ltd. and Global Vehicles U.S.A. terminated.
But franchisees of the Indian diesel pickup maker remain in the dark since neither Mahindra nor Global is saying what's next.
The legal question between Mahindra and Global has stalled the U.S. introduction of compact, four-cylinder-diesel pickups from India since 2010.
Mahindra claimed at that time that Global was no longer its exclusive U.S. distributor. Global claimed that its contract was intact. Dealers have been waiting for a resolution since their franchise agreements are with Global -- not Mahindra.
But dealers still don't know exactly what the court ruling will mean, said Mahindra franchisee Joseph Yergeau, a Manchester, N.H., Buick, Cadillac and Mercedes dealer.
"This is a real kick in the gut," Yergeau said after hearing the news of the London ruling. "I don't know how anyone could come to that conclusion. But we dealers haven't been told anything about what happens next either by Mahindra or by Global."
Perez ponders response
Mahindra revealed the arbitration decision in a brief public letter to the Bombay Stock Exchange this month.
Global CEO John Perez declined to discuss the ruling, saying that the details are still confidential. He indicated in a letter he sent to franchisees last week that his own next move is unclear.
"I want to assure all dealers that the company is reviewing the ruling as well as next steps with its attorneys," Perez's letter reads. "As the strategy is defined with more details, I will update you as soon as possible. I appreciate your patience and understanding in this matter as we move forward."
The dealers have been in limbo since the partnership between Perez and Mahindra broke down in 2010, often complaining that they had no information about their fate. Some dealers have constructed dealerships in preparation for sales of the truck. Others have thrown in the towel on the venture.
Mahindra contracted with Perez in 2006 to sell imported Indian pickups, and Global created a network of nearly 350 dealers for the business.
But in 2010, shortly before U.S. regulators approved the trucks for U.S. roads, Mahindra announced that Global was no longer its distribution company. The Atlanta company took the matter to arbitration in London, as required in its contract.
The deal has been dogged by delays. Shortly after the venture began, dealers and Perez pressed Mahindra for product changes to make the pickup more competitive in the U.S. market. Mahindra overhauled the truck with new components, safety improvements and styling changes.
Mahindra changes tack
Throughout the project, dealers remained gleeful about the prospects for a small, fuel-efficient pickup with a four-cylinder diesel engine that boasted the horsepower and towing capacity of larger pickups with V-6 engines.
But since its falling out with Perez, Mahindra has taken steps in a different direction. The Indian company now owns an interest in Korean automaker Ssangyong Motor Co., which has its own plans to enter the U.S. market.
"I believe Mahindra still intends to bring vehicles into the United States at some point, possibly with Ssangyong," Yergeau said. "And when they do, they're still going to need a dealer network. Whether that includes us or not, I just don't know."
You can reach Lindsay Chappell at lchappell@crain.com.
