Back at the end of 2015, Pininfarina announced that it was being bought by the Mahindra Group, an India based conglomerate.
Mahindra was founded in 1945 to trade in steel and other related products. They first entered the automobile industry three years later by licencing the local manufacture of Willys Jeeps on the sub-continent. Over the last few decades they have grown significantly and spread tentacles into many areas such as finance, technology, education, defence – you name it, they have a subsidiary.
In automotive, they do everything from cars, trucks, motorcycles to farm equipment, components and they also own SsangYong Motors in Korea having bought them in 2011 during a fire sale.
Pininfarina are one of the icons of the car industry – and truly synonymous with Italian style and design. They were founded in the 1930s and their badge can be seen on numerous cars and other products that people cherish. Sadly, by 2015, Pininfarina was heavily in debt – to the tune of $120M and even after restructuring the company and their debt portfolio, they weren’t able to deal with hungry creditors. They had even abandoned contract manufacturing and laid off over 100 workers to reduce costs. “Relevance” had become the internal focus with the company solely focused on design and new tech: electric bicycles, hybrid cars, even architecture and household items.
It took a couple of goes for the creditors to accept the Mahindra Group offer – several banks needed further persuasion apparently. The offer was simple: pay $28M to the owners of the design house, Pincar, for 76% of the ownership; pay the creditors $125M to wipe out all the debt and invest another $20M in the business. There was also an option for Mahindra to take the remaining 24% at a future time.
Pininfarina now sits under Tech Mahindra, the IT arm of the group, and the acquisition had financial help from Mahindra & Mahindra, their sister automotive subsidiary. The plan was to keep Pininfarina independent. Tech Mahindra had invested in design technology and saw Pininfarina as a way to expand into European and importantly the Chinese markets. For the design house, it opened up opportunities within the group and also access to group customers in over 90 countries.
Two years on and with a strong financial backer – it helps to not have the cloud of $120M+ hanging over you – Pininfarina is stronger than ever and is working more in the China market. Long before the Mahindra acquisition, Pininfarina had opened up a small design house in Shanghai to explore the rapidly expanding market. This has paid off with the Chinese manufacturers wanting some European design influence.
I read a report that at the Shanghai Auto Show this year, Pininfarina’s designs were displayed with the Hybrid Kinetic Group showing a range of vehicles and South East Motors showing their DX3 SUV. In the last few years, many of the local manufacturers have bought designs from the studios. Hybrid Kinetic, for one, have signed a multi-year, multi-million dollar contract for their services.
So it seems that as the Chinese brands grow and expand, they hit the same issues that the rest of the world has already experienced: the underlying tech is now getting commoditised and it is the overall design that helps sell the vehicles – and with many cars looking the same by copying design elements, Pininfarina is able to provide European style, elegance and the feel that buyers the world over want. China will certainly give Pininfarina a good revenue stream for the next decade or so.
Then the next step has to be to influence SsangYong design – they must have developed the world’s ugliest vehicles over the years and definitely need help!
The Mahindra Group has done the world a great service by helping to save this icon of the industry.