The decision was taken for “the rationalization and simplification of the corporate structure of the Pininfarina Group” and the unit was no longer “considered strategic” for the development of the group, Pininfarina said in a press statement dated 26 October.
This is in line with Mahindra’s managing director-designate Anish Shah’s effort to exit loss-making ventures that do not hold strategic importance.
The company has so far exited US-based electric bike maker Genze and Australia-based small aircraft manufacturer GippsAero and decided to sell the majority stake in its South Korean subsidiary SsangYong on the block.
The decision to liquidate Pininfarina Engineering came after it incurred losses to the tune of € 150 million (Rs 1,340 crore, approx.) after two international projects fell through, one each with an Iranian and a Chinese company, Italian media reported.
Pininfarina Engineering is a subsidiary of Mahindra’s listed Italian automotive design arm Pininfarina. It was established in 2018 as a “turn-key” or complete vehicle development company.
Mahindra group said that Pininfarina will remain focused on its core competencies of design and engineering. “We are working under challenging circumstances as the situation for the automotive sector continues to be difficult due to the impact of COVID-19. The business needs to right size in line with the market situation and the business will endeavour to support the employees for re-allocation to minimise social impact,” read an extract from Mahindra’s emailed response to ET’s queries.
About 135 jobs at Pininfarina Engineering are on the line and the impacted employees took to the main square at Turin, where the company is based, to protest the liquidation, local media reported.
Trade unions and Pininfarina management have reached an agreement to relocate about 70 employees to the parent company and to another Turin-based company, according to a report from Corriere Torino.
“We fail to understand why the company cannot be reorganized and managed in a way that has competitive costs. We cannot believe that for Pininfarina Engineering Srl there are no more profit margins, as the top management claims,” read an open letter from the protesting employees to Mahindra and Mahindra’s top management.
“We do not understand how this decision fits in with the ethical and social guidelines always declared by the Mahindra Group and its president.”
The employees also wrote a letter to the Italian Minister of Labour and Social Policies Giuliano Poletti
Mahindra and Mahindra and Tech Mahindra jointly-acquired automotive design firm Pininfarina in 2015. The company has designed cars for iconic carmakers like Ferrari, Alfa Romeo, Maserati and Peugeot.