Volvo Confident in Smooth JV With Pininfarina

FRANKFURT – It was pure serendipity when Volvo Cars President Hans-Olov Olsson was placed next to Andrea Pininfarina, president and CEO of Italian specialty car company Pininfarina SpA, at a dinner in Detroit several years ago.

Olsson says Volvo was in the middle of its analysis on developing a new C70 at that time. “We needed a partner that had experience with coupes,” he says.

After a preliminary dinner conversation between the two, serious negotiations quickly followed, ending in a decision to create a joint venture to be called Pininfarina Sverige AB, with a capitalization of SK 100 million ($13 million).

Olsson declines to say how much money Volvo has committed to the JV, but Andrea Pininfarina says his company has invested approximately SK 3 billion ($391 million).

The Italian coachbuilder is the majority shareholder, with 60% ownership of the firm. Profit and loss generated by the JV will be allotted according to ownership.

“It’s our company’s largest investment ever,” Andrea Pininfarina says. “It’s at least 30% higher than any other project we have worked on.”

He says the target volume of the all-new '06 C70 4-seat convertible, which made its worldwide debut at this year’s Frankfurt auto show, is confidential, but Volvo already has announced plans to build 16,000 C70s annually.

New Volvo C70

Olsson claims Volvo will earn profits immediately on each vehicle produced by the JV. (See related story: Second-Generation Volvo Convertible Takes Public Bow)

Andrea Pininfarina says his company will break even on its investment sometime during the lifecycle of the new C70, which he estimates to be between six and seven years.

“We will become profitable, depending on the volume achieved,” he says.

Olsson says the problems Volvo countered during a JV with Tom Walkinshaw Racing, when the original C70 was launched, won’t happen with Pininfarina. (See related story: Volvo C70 Ends Run)

Pininfarina has the engineering and manufacturing expertise to produce high-quality vehicles from the start, Olsson says, while expressing confidence there will be no quality issues compared with the first-generation C70.

Pininfarina had an average of 100 people working for three years on the C70. The development engineering took place at a Pininfarina facility in Turin. But the company for the last year also has had a resident team of 50 people at Volvo’s Uddevalla plant in Sweden, which will build the new C70.

English is the official language spoken at the plant between Volvo and Pininfarina executives. The workers speak Swedish .

“However, we found the level of knowledge of English is very high in the plant,” Andrea Pininfarina says.

He admits he did not investigate the previous history of the first-generation C70 before signing an agreement to partner with Volvo to build the new model, learning of it only after the JV was established.

Pininfarina is committed to a long-term relationship with its customers, Andrea Pininfarina says. “Volvo and Pininfarina trust each other. We are good-faith partners.”

This is not the first project between Pininfarina and Volvo parent Ford Motor Co. The Italian firm did the engineering for converting the Jaguar X-type into a station wagon, although it did not manufacture any of the vehicles.

Pininfarina also converted Ford of Europe’s Ka into the Street Ka, a cabriolet. Andrea Pininfarina says his firm currently is working on a Focus coupe cabriolet that will see the light next June.

Pininfarina built 200,000 Fiat Spyders between 1966-1985. And the company has produced 115,000 Peugeot 406 coupes over the last seven years.