U.S. Dealers Sue India’s Mahindra

Five American car dealers are suing Mahindra & Mahindra Ltd. in federal court in Atlanta, Ga., accusing the Mumbai-based truckmaker of fraud, misrepresentation and conspiracy.

The plaintiffs allege the company duped several hundred dealers into paying nearly $10 million in franchise fees, divulging "trade secrets" and spending to market the company's vehicles. The dealers say Mahindra then reneged on its agreement to deliver vehicles.

The dealers signed up with the automaker's erstwhile distributor, Alpharetta, Ga.-based distributor Global Vehicles USA, to begin selling a compact diesel-powered Mahindra pickup truck in 2009. But the model's launch was repeatedly delayed. The Indian company said its contract with Global Vehicles' contract expired in June 2010.

Mahindra won the approval of the U.S. Environmental Protection Agency for its pickup two months later. The dealer lawsuit alleges the company deliberately delayed certification and began seeking other American partners.

Mahindra denies all the allegations. An earlier dealer lawsuit in Missouri was dismissed, the company notes. It adds that Global Vehicles dropped its U.S. breach-of-contract lawsuit against Mahindra last year and subsequently lost an arbitration case in the U.S.