India’s Mahindra says it halted development plans for U.S. pickup

July 11, 2012

MUMBAI (Reuters) — India’s Mahindra & Mahindra has halted development work on a pickup truck aimed at the U.S. market, the company said today, following legal disputes and failure to win needed certification.

India’s largest utility vehicle maker, which sells tractors in the United States but not passenger vehicles, had been working on the development of a pickup truck version of its popular Scorpio utility vehicle since 2006, spending about $100 million.But the company said those plans are now scrapped.

Mahindra “recently decided not to proceed further with the project due to changes in the U.S. regulatory and market situation,” the company said in today’s statement.

“M&M will continue to monitor the U.S. situation and remain flexible with its approach to this market.”

Last month, the company said it had not obtained the necessary certification to enter the U.S. market with the vehicle, but did not give specifics.

The company had also been involved in a dispute with distributor Global Vehicles, with which it had agreed to launch the Scorpio version in the U.S. market. But earlier this year, an international arbitration panel ruled in favor of the Indian automaker, the flagship company of the Mahindra Group conglomerate.

The company faces a more recent lawsuit filed by American dealers, who allege “intentionally delayed certification of its vehicles.” Mahindra has refuted their claims.

One analyst said Mahindra may look instead to enter the U.S. passenger car market through its South Korean unit Ssangyong.

“I will not say this is a major setback because Ssangyong option is open and they might have some other plan in mind,” said Umesh Karne, an analyst with BRICS Securities.

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