Pininfarina to exit contract manufacturing, loses family control

If you’ve lusted after it, it’s likely Pininfarina designed it. But Pininfarina’s main business has usually come from manufacturing cars under contract for larger companies. Right now it produces Alfa Romeo Brera coupe and spider and the Ford Focus coupe-cabriolet, but the volumes are only about a quarter of what was anticipated. This downturn has created an almost €600 million ($835 million) mountain of debt that has made Pininfarina is almost bankrupt.

To keep the creditor away, Pininfarina has struck a deal with its creditor banks that will relinquish family control and stop most car production. In exchange for forgiveness of €180 million of the debt, the Pininfarina family will give 50.6 percent of its shares to creditor banks. The company will also not seek any new production contracts after all contracts run out in 2011. The only vehicles that Pininfarina will produce after that time will be the B Zero electric car project.

This does not mean an end to Pininfarina’s car design business. But transferring control to a holding company from the family that built the business and bares its name cannot be a good thing.