Tire companies plan to expand production with RMB 3.2 billion
In 2024, Pirelli's net profit increased to 614 million euros just by selling passenger tires. And this level of profitability was achieved under the shrinkage of automobile manufacturing in Europe and the United States.
As the business of automobile OEMs gradually expands in 2025, the market demand for Pirelli's tires will naturally continue to increase. Therefore, the Italian tire manufacturer began to plan to expand production in North America.
Pirelli North America Expansion
It is reported that Pirelli is currently evaluating "significant investments" in the United States to expand its manufacturing capacity. In addition to better meeting the needs of the North American market, investing in the United States can also be seen as a strategy to deal with the Trump administration's higher import tariffs on Mexico and Europe.
Pirelli CEO Andrea Casaluci pointed out that about half of Pirelli's revenue in the United States comes from its Mexican factory supply. The United States intends to impose higher tariffs on Mexico, which has made Pirelli begin to consider increasing imports from Brazilian and European factories in the North American market "under the circumstance of tariffs."
Previously, the United States announced a 25% import tariff on Mexican goods. In fact, the US market accounts for about 20% of Pirelli's global revenue, which is $1.43 billion (RMB 10.4 billion) in 2024.
The expansion of North American market share has always been one of Pirelli's sales goals. Therefore, after the sudden release of the US tax increase measures, Pirelli has also made new preparations for response, that is, in addition to increasing imports from South America, it is also necessary to consider increasing the local response capacity of the US market. Pirelli pointed out that its US plant in Rome, Georgia is a relatively small plant with an annual production capacity of 400,000 high-performance, high-value-added tires.
Therefore, Pirelli has long "sought" product supply support from the Mexican factory, which is why Pirelli increased its production capacity investment in Mexico in 2022 (Pirelli opened a plant in Silao, Mexico in 2012 to support product supply for the US market).
Currently, Mexico's supply accounts for half of Pirelli's sales in the United States, while Brazil and Europe's product supply accounts for 40% of Pirelli's North American sales. According to reports, Pirelli previously imported about 2.5 million tires from Brazil to the United States, and this number can be increased by about 20% in the short term.
Pirelli 3.2 billion to expand global production capacity
In addition to considering increasing the capacity of the US factory, Pirelli also plans to expand the capacity of its Rome factory to increase its supply capacity to the US market. It is reported that the Pirelli Rome factory has been in operation for 23 years. In fact, the Pirelli Rome factory has started technology upgrades-based on Pirelli's MIRS automated production system is already underway.
Pirelli said this is the first step in capacity expansion. The specific investment details of the US factory have not yet been disclosed. Overall, Pirelli's capital expenditure budget for 2025 is US$445 million (RMB 3.2 billion). Pirelli estimates that the negative impact of US tariff actions may be as high as US$32 million (RMB 232 million). In a recent Pirelli conference call, Pirelli clearly stated its willingness to expand its share of the US World Bank.
Higher share in North American market
"In Pirelli's development plan, expanding its market share in the United States is an important part. Compared with Benelli's brand, technology, and connected car influence, Pirelli's market share is still below average. The US market has always been a focus of Pirelli's development strategy. At present, Pirelli's market share in the United States is already strong enough, but based on the trust in the performance of Pirelli's products, Pirelli can become stronger and have more opportunities in the future."
