The global OE Car Tyre market is expected to grow on average by 4.8% per year between 2013 and 2017, up to 496 million pieces.
Positive the performance of the Premium segment, which is forecast to grow on average by 7.4% and account for 34% of the global market in 2017, driven by the development of Emerging Markets.
The global Replacement Tyre market is set to reach 1,068 million pieces in 2017, due to an average growth rate per year of 3% starting from 2013. More than double the speed of development in the Premium segment, which is expected to account for 22% of the whole market in 2017 (+3 pp vs 2013), with an average growth rate of 7.3% per year.
The Car Business: the guidelines in the Industrial Plan
Pirelli strategy in the Car Business develops along three main guidelines, based on an in-depth market segmentation which brought to the foreground the Super Premium segment with top profitability rates.
- An acceleration of our Premium strategy, leveraging on OE pull-through, consumer engagement and developing our Retail distribution network;
- More competitive offering in the Medium range, through the development of specialties and specific efficiency measures;
- Implementation of an efficiency plan on materials, processing costs and SG&A, to down costs by approximately 290 €/mln by 2017.
Volumes in the Premium segment are expected to reach 44% of total in 2016 (38% in 2013)
Revenues in the Premium segment are expected to reach 60% of total in 2016 (56% in 2013)
Levers for value creation in the Premium segment
- OEM pull-through : leveraging on OE supply routes to increase sales in the Replacement segment;
- More attention paid to consumers, through a retail network integration program and targeted marketing actions;
- More intensive sales activities in the most relevant areas: expansion of the retail network, which will go from 6,000 at the end of 2013 to approximately 9,500 units in 2016, with the target of placing 50% of sales in the Premium segment.
Pirelli aims at becoming more competitive in the Medium segment through:
- Designing to cost targets, using a more versatile range of compounds and structures;
- Rationalizing the product portfolio
- Standardizing components;
- Concentrating production in low-cost plants (China, Romania and Russia);
- Extending products like Runflat and Winter Tyres to non-premium segments, to capture the higher margins of products in those segments, too.