Italdesign's Turin rivals might be biggest winners

Luca Ciferri is a reporter for Automotive News
It would be hard to imagine that two people in Turin who are happier right now than Giorgetto Giugiaro and his son, Fabrizio.

The Giugiaros just announced that they have sold a 90 percent stake in their design and engineering company, Italdesign Giugiaro S.p.A., to Volkswagen AG for an undisclosed figure that is estimated to be in the three-digit-million-euro range.

You know who else is celebrating the sale? Italdesign's rivals here in Turin.

Companies such as Stile Bertone, Fioravanti, I.DE.A. Institute, Pininfarina, Stola, TescoGo and Torino Design have not been doing too well lately. Meanwhile, Italdesign has generated an estimated 100 million euros ($123 million) a year during the past few years in sales to non-VW Group brands.

With Italy's most powerful design and engineering specialist focused primarily on satisfying the needs of VW Group's 10 brands, including Porsche, there will be a greater opportunity for those seven companies to win new business.

Italdesign's most lucrative recent non-VW contract is the 375 million euro ($462 million) multi-year deal it signed in January to provide complete design and engineering for eight new models for U.S.-based, Chinese-backed startup automaker Hybrid Kinetic Motors Corp.

If it has to give up that contract because of the VW deal, there could be a number of competitors fighting for a piece of that action.

Another Italdesign contract that might be available is its deal with Malaysia's Proton to develop the production version of the roomy Emas minicar concept that was unveiled at the Geneva show in March.

Italdesign may also have to relinquish business with longtime Chinese partners Brilliance China Automotive and Chery Automobile because it might need to focus on projects for VW's joint venture partners in China, FAW Group Corp. and Shanghai Automotive Industry Corp.

For the struggling Turinese suppliers, Italdesign's takeover could lead to a major windfall because Italian expertise in design and engineering is in high demand, especially in fast-developing Asian markets.

Now the question is: Which rival, or rivals, will be swift and strong enough to gain?