Time of US entry depends on lawsuit result: M&M

Facing a lawsuit in the US court over 'inordinate delay' in launching its pick-up truck, Mahindra & Mahindra today said its time of entering the American market hinges on the outcome of the case.

The company, however, said it is working as per its original schedule to launch its product in the US by December 2010.

"We are going as per (our) original plan for the launch of the pick-up truck in the US, but can't say on the actual time of launch, as it will depend on the outcome of the litigation," Mahindra & Mahindra president (automotive and farm equipment) Pawan Goenka told reporters in New Delhi.

Last month, M&M's exclusive US distributor, Global Vehicles, had filed a lawsuit against the Indian firm before an Atlanta District Court, alleging an inordinate delay in the launch of the pick-up truck. GV had claimed to have made an overall investment of $103.5 million (about Rs 480 crore) along with franchisees to sell M&M's pick-up truck based on Scorpio platform.

The domestic auto major had subsequently filed a motion in the US court, countering GV's lawsuit by asserting the claims were without merit.

M&M, which had planned to launch the vehicle by the end of 2009, had missed two deadlines since, due to regulatory issues.

It had later set end-2010 as the possible launch date for the vehicle in the US.

The company had said it was diligently working towards satisfying all US homologation (making the vehicle comply with regulatory standards) requirements and intended to submit its final application as soon as possible.

In its lawsuit, GV said that it had spent close to $35 million in preparation for the launch of Mahindra vehicles in the US and had signed with as many as 360 dealers nationwide.

This also includes an initial distribution appointment fee of $8.5 million.

GV had also claimed that the US dealers have spent more than $60 million in franchisee fees for the right to sell Mahindra vehicles and asked the court to prevent M&M from selling its vehicles through any other dealer or distributor.

M&M and Global Vehicles had entered into an agreement on September 28, 2006, according to which the latter became the sole distributor of the Indian company's motor vehicles in the US.