U.S. auto dealers in five states are suing Indian truck manufacturer Mahindra, but Andy Jones doesn’t plan to join in the fight.
The owner of Gerald Jones Auto Group was one of 347 auto dealers nationwide scheduled to begin selling Mahindra’s midsize diesel pickups in December 2010. Jones said his dealership invested about $250,000, including costs for renovations, signs and vehicle parts.
Georgia is not one of the states involved in the lawsuit – filed Monday in federal court in Atlanta against Mahindra & Mahindra Ltd. and Mahindra USA Inc. on behalf of dealerships in New Hampshire, Florida, California, New Jersey and Washington. The dealerships are accusing Mahindra of fraud, misrepresentation and conspiracy, claiming that it duped hundreds of auto dealers and walked away with millions in cash and trade secrets.
Jones said that Mahindra had an agreement with Global Imports in Alpharetta, Ga., which was going to be the nationwide distributor. Mahindra said that its agreement ran out with Global Imports.
“They went to arbitration, and Mahindra won,” Jones said.
There is no U.S. distributor for Mahindra vehicles, so all the dealers are in limbo. Still, Jones said he isn’t sure why the other states are suing, unless they are trying to protect their dealers.
If Georgia joined the lawsuit, Jones said, he would need to find out why before getting involved.
“I just don’t know what the grounds would be because the agreement wasn’t between me and the manufacturer. I don’t really have an opinion about whether it’s right or wrong. I’m not sure because I certainly didn’t know all of the ins and outs,” Jones said. “We would still like to be the Mahindra dealer. We’ve spent money on the property. We’ve bought signage.”
Jones thinks he has a 50-50 chance of becoming a Mahindra dealer.
“I still think Mahindra is coming,” Jones said. “I don’t really know what their problem is with the distributor, but I would hope that they would go back to the guys that had the original agreement and honor the agreement with them because we have invested. It would save them a lot of time and money, and obviously save me a lot of money.”
In a statement, an attorney for the dealers, Michael Diaz, said Mahindra told dealers that its light trucks and SUVs were ready for delivery to the U.S. market but “intentionally delayed certification of its vehicles after obtaining the dealership fees and trade secrets.” Diaz also said that Mahindra began pursuing other partners.
A statement on Mahindra’s Web site says the company cannot comment on the legal matter but goes on to say the company “unequivocally denies all allegations of fraud, misrepresentation and conspiracy.”
After getting millions in fees from the dealers, Mahindra continued to tell them its certification process was on track, but the company was actually delaying submitting the required documentation to regulators as a pretext to terminate its agreements, Diaz said. The lawsuit says the dealers have given Mahindra more than $9.5 million in cash and more than $100 million worth of dealer trade secrets and a strong market foundation from the dealers’ “free” promotion of Mahindra.
“Mahindra repeatedly failed to live up to its obligations,” Diaz said. “Now, after spending millions of dollars on behalf of Mahindra, the U.S. dealers have nothing to show for their time and energy other than a series of false promises.”
Associated Press reports were used in this article.