Mahindra clears way to enter US market as it wins arbitration against Global Vehicles

March 11, 2012 - PRLog -- In what could be termed as a shot in the arm, India's largest utility vehicle manufacturer, Mahindra & Mahindra had won the arbitration case against US-based automotive dealer, Global Vehicles for violation of distribution agreement for selling its vehicles in the US.

Mahindra had a tiff with its distributor in the US, Global Vehicles, which accused the former of violating the distribution agreement for selling vehicles in that country. Mahindra was greatly relieved, with the International Arbitration panel dismissing the claims of GV. What is more, the arbitrators held that the distribution agreement with GV had ended according to its own terms, while clarifying that the Indian auto major had not violated any agreement or law in the US in its dealings, Mahindra told the Bombay Stock Exchange, in a mandatory filing on Friday.

The origin of the tiff can be traced back to 2010, when Mahindra announced its plans of selling vehicles in the US, a range of products including 2.2 litre, four cylinder compact pick-up truck, from the stable of Scorpio. Eventually, the auto firm had to suspend its plans, thanks to its Georgia-based dealer's suit, filed in the US distrcit court in Atlanta in June that year, accuding Mahindra of violating a 2006 agreement that GV would be the exclusive distributor of Mahindra vehicles in the US.

Apparently, with the court ruling in favour of Mahindra, the way is cleared for Mahindra to stage a comeback in the US market with a renewed strategy, an ET report said. The report further said that Mahindra officials were tight-lipped on the future roll-out plan. Furthermore, the company also said that a US court has rejected another lawsuit by a group of dealers against Mahindra and Global Vehicles without divulging details on the same . Experts were quoted as saying that while the entry into the US market might as well have got delayed, over the last two years,  nevertheless, Mahindra's product portfolio has got a big boost with the acquisition of the Korean utility vehicle manufacturing firm, Ssangyong and the resultant setting up of a new modern factory in Chakan, near Pune in the western Indian state of Maharashtra, which has started operations. This has further moved Mahindra's value proposition in the global arena.

The report further said that the company now has a superior product portfolio and the requisite manufacturing capacity. Now Mahindra can have a re-look at the growth strategy in the US market. Currently, the US market is showing a lot of improvement in the utility vehicle business. Having said that the US market has humungous opportunity for a company like Mahindra to grow, but what with a slew of auto makers foraying into this highly competitive business, Mahindra has to work hard to establish its presence in that market. Originally, Mahindra had plans to launch its pick-up trucks back in 2009, but it plans went haywire due to the regulatory approval issues.  For a detailed report, visit  http://automotivehorizon.sulekha.com/mahindra-wins-arbitr...