The Federation of Automobile
Dealers Association (FADA) has through its counsel Khaitan & Co, issued a
legal notice to UM Lohia and its management, asking them to redress all
grievances of dealers relating to the losses suffered by the dealers due to
actions of UM Lohia.
The UM Lohia management has
been asked to take steps to ensure the maintenance and servicing of motorcycles
already sold in accordance with the warranty terms and law. If UM Lohia and its
management does not respond to FADA’s legal notice, FADA will have no other option
but to take appropriate legal measures against the Company, its management and
all others concerned with this matter. FADA will also update and involve Government
Authorities in this matter.
FADA is taking up the cause
of the dealers of UM Motorcycles which used to manufacture and sell motorcycles
in India. The motorcycles were manufactured at the Kashipur, Uttrakhand plant
of UM Lohia Two Wheelers Pvt. Ltd.
UM Lohia is a joint venture
between the Lohia Group and UM Motorcycles, an American motorcycle company. The
joint venture was set up in 2016 to manufacture and sell in India ‘American’
style motorcycles under the brand of UM Motorcycles. These included the
Renegade and Commando range of motorcycles.
According to FADA, the dealers
are aggrieved by the dishonesty and fraud on part of the management and promoters
of UM Lohia, including founders Ayush Kumar Lohia and Jose Miguel Villegas.
Motown India had met both
Jose as well as Ayush Lohia a couple of months back and they had said that they
would be reviving the company in a few months of time and would also be
introducing new products in the Indian market.
But according to a FADA
press release, the dealers’ woes began as soon as UM Lohia entered the market
with its motorcycles. It soon came to light that the so called ‘American’
motorcycles were actually being assembled from Chinese parts at UM Lohia’s
manufacturing plant in Kashipur. Consumer interest immediately dipped as no one
wanted to purchase cheap Chinese replicas of ‘American’ motorcycles. The brand
lost its value, and with it the investments of dealers, who were now holding a
product few desired.
Further, at the time when
the entire automobile industry in India was moving towards BS-IV emission
standards, UM Lohia chose to enter the market by introducing BS-III motorcycles
in the 2nd half of 2016, even though, the ban on sale of BS-III vehicles was to
take effect in a few months, from April 2017. As soon as the ban on BS-III
vehicles came into effect, the dealers of UM Lohia were left with a huge
inventory of BS-III motorcycles which was not only undesired by customers but
now also legally unsellable.
UM Lohia, however, refused
to compensate dealers for this unsellable stock and also refused to return the
advance payments given by many dealers. It is only after much cajoling that UM
Lohia even acknowledged the problem. Even then, instead of buying back the
BS-III motorcycles from the dealers and returning their advances, UM Lohia came
up with the scheme to sell BS-IV motorcycles to dealers in lieu of their stock
of BS-III motorcycles and advances. However, the BS-IV motorcycles supplied by UM
Lohia were entirely unfit to ply on roads with several basic components such as
EFI Module controller and gear breaking down within few days of use of the
motorcycles by the customers.
To make matters worse, according
to the FADA release, UM Lohia has now surreptitiously folded up its operations
and shut down its warehouse for spare parts making it impossible for dealers to
service the warranty claims on the defective UM motorcycles. As a result, many
dealers have been exposed to litigation from customers of UM motorcycles. In
all this, UM Lohia, its promoters and its management, have shown no inclination
or interest in resolving the dealers’ grievances, despite several attempts made
by the dealers, first themselves, and then, through FADA.
The promoters of UM Lohia
have now started new ventures – the Lohia group is now investing in the
e-vehicles segment and once again finding dealers for this new venture.
Accordingly, to protect the
interests of the customers and the dealers, FADA, through its counsel Khaitan
& Co, has issued a legal notice to UM Lohia and its management.
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