The U.S. dealer backlash against Indian automaker Mahindra & Mahindra Ltd. has intensified with a second lawsuit seeking class-action status.
The suit, filed in federal court in Atlanta by St. Louis Toyota-Scion dealer Jerry Ackerman, not only seeks compensation for would-be Mahindra dealers for investments they made to prepare for selling Mahindra's diesel pickups but also requests that the court block any effort by Mahindra to bring vehicles into the United States until it resolves its dealer complaints.
That could complicate plans for Mahindra. The Indian company has acquired an interest in South Korea's small-car maker Ssangyong Motor Co. Ssangyong stated two years ago that it hoped to begin U.S. sales in partnership with Mahindra by 2016, perhaps as soon as next year.
Ackerman's suit means that there are now two potential class-action lawsuits working their way through the court in Atlanta.
A complaint representing a separate group of Mahindra franchisees alleges that Mahindra never intended to work with Global Vehicles U.S.A. Inc., the Atlanta company it retained as its independent U.S. distributor, or its U.S. retailers. It alleges that Mahindra deceived Global to exact trade secrets from interested dealers for a future U.S. market entry.
This is Ackerman's second attempt at suing Mahindra. He sued the company in Missouri two years ago, but the suit was dismissed when the court concluded Mahindra was not doing business in Missouri.
Ackerman's new lawsuit is a rare bit of encouragement for would-be retailers left unhappy by Mahindra's failure to launch.
Nearly 350 dealers paid franchise fees and in some cases made dealership investments to become Mahindra retailers from 2007 to 2010. But a falling out between Mahindra and Global left dealers with no trucks and little hope of recouping their investments.
Dealers were required to pay $150,000 to $250,000 for franchises, in addition to the cost of constructing showrooms.
Global and the dealers have had little success appealing to Mahindra to resume its plan, pressuring it to do so, or having international arbitrators or U.S. courts force it to do so.
In a rare comment on its U.S. troubles, Mahindra wrote in an e-mailed statement last week that "this was a business venture that all parties entered into with a clear understanding that the outcome could not be guaranteed.
"The company maintains interest in the U.S., and there may be a time when the issue of entering the market is revisited."