FADA issues legal notice to UM Lohia and its management

Our Bureau Mumbai | Updated on October 23, 2019

The Federation of Automobile Dealers Association (FADA) has issued a legal notice to UM Lohia and its management, alleging dishonesty and fraud on the part of the management and promoters of UM Lohia.

UM Lohia Two Wheelers Pvt. Ltd (UM Lohia) is a joint venture between the Lohia Group and UM Motorcycles, an American motorcycle company.

FADA said in a release that this legal notice is served to protect the interests of consumers and dealers, whilst also calling upon them to redress the dealers grievances relating to the losses they have reportedly suffered due to UM Lohia. It is also to prompt the company to take steps to ensure the maintenance and servicing of motorcycles already sold, in accordance with the warranty terms and law.

The joint venture was set up in 2016 to manufacture and sell in India ‘American’ style motorcycles under the brand of ‘UM Motorcycles’.

UM Lohia has now allegedly folded up operations and shut down its warehouse for spare parts, making it impossible for dealers to service the warranty claims on the defective UM motorcycles, and as a result, many dealers have been exposed to litigation from customers of UM motorcycles, it said.

“If UM Lohia and its management does not respond to our 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. Simultaneously, FADA will also update and involve government authorities in this matter,” the association further stated.

It said that the dealers are aggrieved by “the dishonesty and fraud on (the) part of the management and promoters of UM Lohia, including founders Mr. Ayush Kumar Lohia and Mr. Jose Miguel Villegas which has caused huge losses to dealers as well as exposed them to unwarranted litigation from the customers of UM Motorcycles”.

“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, Uttar Pradesh. 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,”

It said that UM Lohia entered the market by introducing BS-3 motorcycles during the second half of 2016, even though the ban on the sale of BS-3 vehicles was due in a few months time, from April 2017. Once the ban came into effect, the dealers of UM Lohia were left with a huge inventory of BS-3 motorcycles, which couldn’t be sold. “UM Lohia, however, refused to compensate dealers for this unsellable stock and also refused to return the advance payments given by many dealers,” it said,

“...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.”

“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,” it further stated.

The promoters of UM Lohia have now started new ventures, with the Lohia group now investing in the e-vehicles segment and once again finding dealers for this new venture, it added.

Published on October 23, 2019

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