Pininfarinas announcement late last year that it would cease contract manufacturing by the end of 2011 could leave Austrias Magna Steyr as the only large-scale contract manufacturer in Europe.
In any supplier sector, its not good to be the last one standing.
The worst choice for a carmaker is to have just one choice, a high-ranking European automotive executive told Automotive News Europe on condition of anonymity.
When choosing suppliers, automakers want to be able to find the right fit for their business. Contract manufacturing is no different.
Some coachbuilders specialize in refining an automakers design, others are better at bending sheet metal, others have the structure to efficiently handle runs of 20,000 to 40,000 specialty vehicles.
But niche models dont bring coachbuilders the profits they once did. And the increasing flexibility of automakers assembly plants means that more car companies are bringing the work in-house.
As a result, coachbuilders such as Pininfarina, Karmann of Germany and Valmet of Finland are either exiting contract manufacturing, are on the verge of doing so due to a lack of orders, or plan to concentrate more on making electric vehicles. For example, Pininfarina will produce electric cars under its own name starting late next year.
In late 2008, Heuliez was taken over by Argentum Motors, Indias largest independent contract manufacturer. But the French coachbuilders only production contract, the Opel/Vauxhall Tigra Twin Top, ends this year.
Even worse off is Carrozzeria Bertone of Italy, which ceased volume production at the end of 2005 and has yet to find a buyer.
That basically leaves Magna Steyr as the only choice for contract manufacturing in Europe.
Automakers dont like this, and, privately, Magna Steyr executives arent thrilled either.
Life has not been easy for Magna Steyr recently. Production at its plant in Graz, Austria, fell to less than 150,000 units last year, almost 100,000 units below the 248,059 record the company set in 2006.
If this number looks worryingly low, consider that most of Magna Steyrs ailing competitors each built about one-tenth of the Austrian companys declining volume. And Magna Steyr executives say 2006 was a freak abnormality in a business plan aimed at much lower volumes.