Turin's Pininfarina has long prospered as the Italian auto design boutique best known for crafting exquisitely shaped Ferrari sports cars. But Chief Executive Andrea Pininfarina, whose father, Sergio, is chairman and chief designer, saw a bigger and more profitable future beyond the niche business of styling super-luxury roadsters. In 2000 he launched a bold new strategy to transform Pininfarina into a European leader in automotive engineering services. His idea: to retain Pininfarina's traditional design expertise while building up its ability to engineer new models from start to finish -- a complex computer modeling task involving thousands of components and a much higher-margin business.
The 47-year-old CEO's vision is paying off. Revenues last year rose 88%, to $826 million, as operating profit jumped 27%, to $32 million -- a star performance especially given the depressed Italian economy and an achievement for Europe, where most companies are exporting high-tech jobs to cheaper points east. The engineering business will account for roughly 24% of overall revenues this year -- up from less than 10% in 2000. And several projects in the works should help the company hit its target of $1.2 billion in revenues by 2006. "We are 30% to 40% of the way toward reaching our strategic goal," says Pininfarina, who recently clinched several engineering contracts with PSA Peugeot-Citro?n (PEUGY), a joint venture with Volvo (F), and two new projects in China.
He's also betting on a $25 million investment in a joint venture startup, called Open Air Systems, with the private German convertible-top maker Webasto. Its first contract is making retractable roofs for the hot-selling BMW Mini convertible, recently launched in Europe. Pininfarina expects the venture to generate $360 million in revenues in 2006. "This year has been huge," he says. "Now we need to catch our breath before growth takes off again in 2006."
Pininfarina has worked for the family company since 1983, after graduating as a mechanical engineer from Polytechnic of Turin. While his 77-year-old father still sketches the world's most beautiful cars, Andrea is proving innovative strategies can forge an Italian growth champion.