Spurned dealers: Mahindra ripped us off
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A group of U.S. dealers who were in line to sell Mahindra-brand pickups imported from India have accused the manufacturer of a conspiracy to bilk them out of $60 million in cash and trade secrets about how to retail in America.
Five would-be Mahindra dealers in five states have filed a lawsuit in federal court in Atlanta alleging that Mahindra & Mahindra Ltd. misled dealers about when and how it would enter the United States and "never intended to bring Mahindra vehicles into the U.S. in the fashion that they touted."
Mahindra denied the dealers' claims, placing blame for the failure of plans to sell its pickups here on its former U.S. distributor, Global Vehicles U.S.A. Inc. of Atlanta.
The suit alleges Mahindra has "pocketed more than $9.5 million, more than a $100 million worth of dealer trade secrets to utilize for their future entrance into the U.S. market, and a strong market foundation gained at the expense of the dealers' 'free' promotion of Mahindra's brand name around the U.S."
The suit alleges the Indian conglomerate "wanted an insider's perspective of the U.S. automobile industry, it wanted a ready-made network of dealers, and it wanted someone else to pay for it."
Plan died in 2010
Mahindra said in a statement: "Mahindra unequivocally denies all allegations of fraud, misrepresentation and conspiracy."
The statement noted that a group of dealers previously had filed suit in Missouri against the Indian manufacturer. "The Missouri Court dismissed all claims against Mahindra in that suit," the statement said. "Significantly, the Missouri Court also ruled that Mahindra could not be held liable for any action with respect to its dealers."
Mahindra has said in the past that it remains interested in the United States and that Global Vehicles allowed the initial venture to go off the rails by letting its contract expire.
That partnership collapsed in June 2010. This year Global Vehicles lost a court bid to force Mahindra into pressing ahead with its plan. Global is not a defendant in the new lawsuit.
The auto retail companies suing Mahindra are: Holloway Buick-GMC of New Hampshire; Crown Global LLC of Florida; Elk Grove Toyota of California; Mauro Motors Inc. of New Jersey; and One World Armada of Bellevue Inc. of Washington.
Miami lawyer Michael Diaz, the lead lawyer for the retailers, held meetings last week in Dallas and Atlanta to speak with other dealers about the lawsuit, according to a dealer familiar with the case.
Launch date was '08
Mahindra's effort to enter the United States with a four-cylinder diesel pickup has been a six-year saga of setbacks and changes in plans.
Global Vehicles, founded by former Atlanta auto retailer John Perez, assembled a network of nearly 350 retailers in preparation for a Mahindra launch, which was scheduled for late 2008. But the project was delayed as Mahindra tried to get the small diesel truck approved by U.S. regulators.
The lawsuit alleges that "by January 2010 the dealers had invested more than $65 million in fees for the right to sell Mahindra vehicles and more than $160 million upgrading their facilities. Moreover, by January 2010, the dealers had expended more than $60 million in marketing and advertising of Mahindra vehicles throughout the U.S."
The delays turned the Mahindra-Perez partnership into a contentious affair. According to the lawsuit, Perez was surprised to discover on a trip to Mahindra offices in Mumbai that Mahindra possessed confidential dealer financial information and plans that Global had not provided. The suit alleges that Mahindra obtained the information surreptitiously and that it intended to get rid of Global Vehicles.
The suit alleges that "Mahindra is now attempting to enter the U.S. market, using the benefit of funds, information, and trade secrets obtained from Global Vehicles and the dealers."
• Holloway Buick-GMC of New Hampshire
• Crown Global LLC of Florida
• Elk Grove Toyota of California
• Mauro Motors Inc. of New Jersey
• One World Armada of Bellevue Inc. of Washington
You can reach Lindsay Chappell at lchappell@crain.com.
