Pininfarina was a niche Italian automobile manufacturer and designer known for producing exclusive models. In the 1990s, it faced challenges from global competition and lower capacity utilization. To improve, Pininfarina streamlined operations, reduced suppliers, introduced work teams, and provided training. It signed a deal with Mitsubishi to produce the new Pajero Pinin SUV at a dedicated facility, which would utilize existing resources, improve quality standards, and create new jobs. The agreement positioned Pininfarina for growth in the expanding compact SUV market.

1. PININFARNIA
THE NEW CUSTOMER DECISION
AKSHIT SOBTI
ANKUR VERMA
JASDEEP BEDI
ABHINAV PARMAR
BHUPESH SINGH

2. CONTENTS
Company Background
Position in 1990s
Operations at Pininfarina
Improvement Initiatives in 1990s
Deal with Mitsubishi
Questions
Future Scope

3. PININFARNIA BACKGROUND
´ In 1930 Battista ´Bininµ Farina founded.
´ Specialized in design and production of custom and small series
automobile.
´ Greatest success- producing revered designs such as Ferrari
Berlinetta Dino and Alfa Romeo Spider Duetto.
´ In 1966 after death of Farina, name of business was changed to
Pininfarina.
´ Throughout the 1960s and 1970s it continued to design and
produce unique automobiles- Ferrari Berlinetta, the Lancia
Flaminia, the Austin A 40 and Morris 1100.

4. THE NICHE MANUFACTURER
Pininfarnia was considered a niche manufacturer.
Production volume ranged from only one or two cars per
day.
For special sedans such as Fiat Coupe 50 or 60 cars per day.
It had produced over 17000 Fiat Coupes in 1994.
Volume producer bargaining power was high and niche
manufacturer margins were narrow.

5. Flexibility as they were often given contracts on models that had
higher then usual volume uncertainty and larger seasonal
fluctuations in sales.
Products aimed at narrow market segments that were difficult to
specify and had rapidly shifting tastes.
They coped by developing elaborate contingency plans as this
allowed them to rapidly shift workers from one line to another as
demand fluctuates.
This increases station time so that the line moved more slowly.

6. ADVANTAGES OF NICHE PRODUCTION:
´ Niche manufacturer costs for small volume products were lower than
those usually achieved by volume assemblers.
Twice less capital and fixed cost.
General purpose equipments and fewer other specialized tools
needed.
Fewer mechanically performed operations and lower level of
automation.
Do not use continuously moving assembly line, had ´stop and go
processµ.

7. Highly competent and renowned design skills in product and
process.
Design services were an independent source of revenue for them.
In 1994 design and engineering revenue totaled nearly 90 billion
pounds.
Close links and effective joint problem solving between design
and manufacturing was a major advantage in success of a new car
model.
Some designers such as Pininfarnia and Bertone had widely
recognized brand names.

8. PININFARINA POSITION IN
THE 1990
Problems arises like:-
‡Capacity utilization
‡Global competition
‡Japanese firms enter

9. MANUFACTURING OPERATIONS AT PININFARINA
Pininfarina produced both bodies and fully
assembled cars at two major production facilities:
1. Grugliasco
2. San Giorgio

10. ¨ Rapidly phased out the production of bodies
and assembling
¨ Committed toward new models
¨ Operational improvement in quality , cost
and deliverability
¨ Manufacturing performance improve

11. WORKFORCE AND QUALITY INITIATIVES
Two major changes
1.Introduced work team system model
2.Training program
specific operation and techniques training
Interpersonal skills training

12. In 1991, Pininfarina had about 650 supplier.
Typically, competitive bids were among supplier and
volumes were split among several supplier.
By 1993, the number of supplier had been reduced
to 350
Advantages :- increase frequency of deliveries and
increase quality
Disadvantages:-decreasing total amount of combined
inspection

13. ´ By 1996, the number of supplier had been
increased again to 450 driven by
Improved purchase price and inventory levels.
Used new production model
Manage customer needs
Assemble vehicles

14. THE NEW CUSTOMER DECISION
Design
´ A perfect blend of beauty and technological innovation...
Engineering
´ From definition of styling to release of the product...
Manufacturing
´ Pininfarina is a leader in the production of niche vehicles...
ARC
´ The Pininfarina Aero-acoustic and Aerodynamic Research Centre.

15. Pininfarina Extra
´ Enter the Pininfarina world of the product and interior design.
Special Projects
´ Looking for the car of your dreams? Pininfarina will create it for you.
Consultancy
´ In this section you can find all the information about the services offered by
Pininfarina Consulting
Customers
´ Alfa Romeo, Ferrari, Ford, Mitsubishi, Volvo and many other leading names on the
world automotive scene..

16. SERVICES
Car, automobiles, design, style, history,
heritage, collectors, dream car, engineering,
production, Pininfarina, vehicles, niche,
creativity, prototypes, show car.

17. CUSTOMERS
Ferrari, Maserati, Fiat , Lancia, Alfa Romeo,
Peugeot, Citroen, Rolls-Royce, Daewoo, Honda,
Hyundai, General Motors, Brilliance, AviChina ²
Hafei, Chery, JAC, Ford, Jaguar, Volvo,
Mitsubishi

18. CAPITAL INVESTMENT
New production facilities would have to be acquired and
equipped for Mitsubishi production.
Additional expenses related to the paint shop which would
have to run for additional shift.
The Pajero would offer a two tone painting option, and this
also posed some problem for the paint shop.
Space is required to dry and store vehicles in between
painting stages.

19. QUALITY
´ Bertrandi knew that Mitsubishi consider its own quality standards to be
very high and that it focus differ from Pininfarina·s existing customers.
´ Some in the company believed the Mitsubishi might demand the defect
level to be ¼th of Pininfarina.
´ Experience shows that different customers considered different things in
deciding what was the defect.
´ Some customers specified the quality as harness of engine
compartment, while other manufacturer only functionality was
considered.

20. PARTS AND LOGISTICS
Major mechanical parts like engines would be supplied by the
production in Japan either from Mitsubushi itself or from one of
its suppliers.
Other parts are sourced from Europe.
Mitsubushi agreed to own the inventory until it arrived at
Pininfarina.
Pininfarina has some experience in long distance supply chain.
Pininfarina calculated that 13 days shipping would be required.

21. WORK-FORCE
´ 600 additional Direct Workers
´ 200-240 Indirect Workers
´ Full Utilization of present Resources Possible
´ Ramped Down existing Contracts business

22. QA
1. Should Pininfarina Accept the Mitsubishi Business or
Not ?
Yes !
Learning Opportunity
Chance to improve Operation system and make compatible with
global competition
Promises Utilization of extra facilities available due to retirement
of old models
Chance to be a GLOBAL LEADER in Niche manufacturer
Easily Adaptable Japanese Model with Pininfarina·s Operation.

23. 2. Pininfarina·s Possible Strategies for future Competition
‡ Should Adopt the Japanese Operation system as Japanese
manufacturers are the big threat in European Auto market
at that time
‡ May Identify Itself as Global Niche Manufacturer by getting
order from almost all Volume manufacturers.
‡ Same time should Joint Venture for designing with big
players of Auto market

24. THE DEAL
The agreement between Mitsubishi Motors and Pininfarina would involve purchasing an
industrial site as a production facility dedicated to the production of the new Mitsubishi
PAJERO PININ. Initial production with basic facilities would cost around 4 billion.
The plant will carry out the assembly and finishing operations, as well as the final check-
up and testing on the track adjacent to the plant. The body assembly and paint shop would
remain at the Industrie Pininfarina factory in Grugliasco.
For Pininfarina, this agreement means not only a significant increase in its manufacturing
operations, but also opens the door on an extremely promising market sector. The compact
SUV segment (small size Sport Utility Vehicles) have been one of the fastest growing
segments in the European automotive market. Sales volume of compact SUVs are expected
to reach approximately 440,000 units by the year 2000.

25. The Group has reached a level of excellence in the quality/cost/service ratio, also in its
manufacturing activities, like the ones of design and creativity, and represents a particularly
significant event in the current automotive scenario, both from the industrial point of view and as
regards employment.
The plant will provide the local economy a substantial boost. It will employ 450 people,
creating 200 new jobs and transferring 250 jobs from other Pininfarina plants.