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Industry
US Safety & Emission Approval
for M&M to Market Trucks
Indian auto major Mahindra & Mahindra
(M&M) has finally received the much-delayed
safety and emission certificate from the US
Environmental Protection Agency (EPA) to sell
its compact diesel pick-up truck in the US
market.
Although M&M's US venture is embroiled in a
lawsuit filed by its US distributor, the company
joins a select group of global automobile
manufacturers and is the first Indian
automobile manufacturer to receive the EPA
certification for diesel- powered Light Duty
Vehicle (LDVs).
M&M president (automotive) Pawan Goenka
had said in May 2010 that the company would
launch the compact diesel pick-up truck in the
US by the end of the year to become the first
Indian company to sell an Indian-made vehicle
in North America.
M&M will be selling two models in the US, the
TR20 and TR40 of 2011 model year. Both will
be powered by M&M's modified version of the
mHawk 2.2-liter four-cylinder diesel engine.
M&M is expected to price the pick-ups starting
at around $22,000, which will come with a
four-year or 60,000-mile warranty. M&M has
till date built 175 prototypes in India and tested
30 in the US. The pick-ups are currently being
sold in Europe, Africa and South America. The
pick-ups would be produced at the company's
Chakan facility and exported to the US, and
M&M plans to later assemble the vehicles in the
US.
M&M had earlier said that the delay in the
timing of the launch was due to the changes
required to be made to the pick-up to conform
to the US regulations and American design
preferences and later for failing to get the final
safety and emission certificate in time-both
issues made the company miss two launch
deadlines.
But the EPA clearance will still not allow M&M
to launch the pick-up soon in the US market
since the delay led its exclusive US distributor
Atlanta-based Global Vehicles USA Inc (GV)
filing a suit in June 2010 in a district court in
Atlanta for not revealing when it would proceed with the launch and
also initiated arbitration proceedings against M&M.
The US firm has also urged the court to prevent M&M from selling
its vehicles through any other dealer or distributor in the US since
M&M altered the original contract and wanted a new "onerous" set
of financial demands in order continue with the contract.
Both sides have released differing press releases after M&M
received the EPA clearance on 17 August 2010. "Mahindra's
relationship with Global Vehicles Inc (GV) has ended, the
agreement dated 26 September 2006 between Mahindra and GV
having terminated," said M&M recently in a terse one-line press
release.
While GV said, ''Global Vehicles remains committed to distributing
vehicles to its dealers under the terms of its agreement with
Mahindra as expeditiously as possible through the ongoing
litigation between the parties or otherwise.
GV's release went on to say that M&M's claim that that the
termination of the agreement ''is inaccurate.'' ''While it is true
Mahindra attempted to terminate the exclusive Distributor
Agreement with Global Vehicles after Global Vehicles filed an
arbitration demand seeking to compel Mahindra to deliver vehicles
to its dealers, such attempted termination is invalid under
applicable laws of the United States and the State of Georgia,
something which Mahindra continues to disregard,'' JV's release
added.
Global Vehicles had earlier claimed in its lawsuit that it had spent
more than $35 million and signed more than 350 dealers, who in
turn have paid more than $60 million towards franchisee fees for
the right to sell M&M vehicles in the US.
Although M&M has filed for a motion in the court to dismiss the
lawsuit, it will have to settle this issue fast in order to keep with its
aim of launching the vehicle in the US by year end.
INDO-US BUSINESS SPECIAL ISSUE
53