Mitsubishi must pay contract manufacturer Pininfarina almost 19 million euros

Article by Christian Andrei, on August 30, 2010

Mitsubishi Motors Corp. has to pay about 19 million euros (about $25 million) to contract manufacturer Pininfarina S.p.A. to settle a two-year dispute related to the production of Mitsubishi Colt CZC. Pininfarina was awarded a contract by Mitsubishi to make the subcompact convertible; however, the car failed to meet sales expectations.

Between 2006 and 2008, 16,695 units were built (less than one-third of the planned 60,000-unit volume). To compensate for the late production start and due to quality complaints, the European subsidiary of Mitsubishi demanded 43.4 million euros in damages from Pininfarina.

Pininfarina made a counterclaim, asserting that Mitsubishi had overestimated the market for the CZC and sought 100 million euros in compensation as damages and to recover its investments for the units that were not assembled.

Last month, the International Chamber of Commerce's arbitration court in Paris resolved the case by awarding Pininfarina 37.9 million euros plus interest to pay back the investment to make the Colt CZC.

The request for damages was dismissed. For a six-month delay in the car's production start, arbitrators awarded Mitsubishi with 20.5 million euros plus interest; however they junked the complaints about quality issues.

Consequently, the court ordered Mitsubishi to pay Pininfarina the net amount of 19.2 million euros, including interest payments.

According to a Pininfarina spokesman, Mitsubishi's inadequate marketing efforts and an overestimated market potential for the model were the primary reasons for the low sales of the Colt CZC.

He added that the quality of the Colt CZC would not be an issue because the Colt hatchback, produced by Mitsubishi at the NedCar factory in the Netherlands, only sold about a third of initial expectations.

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