Regional strategy: LATAM
Positive macroeconomic outlook for the Region, supported by the Brazilian economy.
Yearly GDP growth rate between 2013 and 2017 is expected at +3.9%, thanks to strong internal demand (approximately 10 mln new people will join middle-class in the next 5 years) and to continuous foreign investments in the region.
The number of vehicles in use and new registrations are both due to grow between 2013 and 2017. 60% of the vehicles are found in Brazil (70% of total registrations in the Region). The SUV market is expected to grow strongly: +100% new registrations in 2017 vs 2013.
Truck: Truck parc on the rise (+6.7%) thanks to economic growth, fleets parc renewal, government subsidies.
All of the market segments – Car, Moto, Truck - are expected to grow and witness a gradual shift of demand to Premium: robust expansion of Premium, at a rate 5 times higher than the overall market (10.2% its weight over the total in 2017, +4.9 pp vs. 2013); Moto Radial Tyres to double over the Plan horizon, Truck All-Steel >70% of the market in 2017.
Pirelli in LATAM
- Market Leader (market share >20% in Brazil, >30% in Argentina) and only player operating in all Business segments – Car, Moto, Truck and Agro. Strategic partner of the major car makers, with a 40% share of the Car OE market in Brazil and Argentina;
- Strong Brand: “Top of Mind” in Brazil for the fifth year in a row and in Argentina;
- The largest distribution chain: approximately 1600 POSs in Brazil, including fully owned, mono Brand and light franchisee stores;
- 7 plants (5 in Brazil, producing Car, Moto, Truck and Agro; 1 Car Tyre plant in Argentina and 1 Car Tyre plant in Venezuela). Their production is mostly directed to the Region’s market;
- 36% is the Region’s contribution to the Group’s revenues.
TARGET: CONFIRMING OUR MARKET LEADERSHIP THROUGH EXCELLENCE AND INNOVATION
- Increasing focus on Premium, which is due to grow strongly: +22% the CAGR in the 2013-17 period, more than 5 times the overall market growth rate, to be attained by widening our commercial offering and increasing production in Brazil - 35% the weight of Premium production anticipated for 2017 against 23% in 2013 - as well as in Argentina (Premium production from 4% to 16%)
- Reinforcement of the Medium segment, through a wider and more competitive offering
- Consolidation of the bonds with the major car makers, keeping the leading position in technology in the Region and fostering partnerships with Premium OEMs, such as Audi, BMW and Mercedes
- Greater OE pull-through by creating more synergies with car dealers
- Renewal of product portfolio in all segments with the introduction of Cinturato HP in the Car range, a complete implementation of “Serie 01” in the Truck and Radial HR Tyres in the Moto; widening of the SUV range to defend one of the fastest growing segments (2x the sales expected between 2013 and 2017)
- Further expansion and consolidation of the distribution network with the “Retail excellence model”:
- >+30% single Brand POSs: from the current 580 to more than 750 in 2017
- Introduction of specific technologies to allow single Brand dealers to better manage their stocks (VMI – Vendor Management Inventory system)
- Optimisation of logistic flows in the area
- Improvement and increase of Truck and Agro production:
- All-Steel capacity +8% in 2017 vs. 2013
- Agro production expected to grow by 27% by 2017 as against 2013, with an increase in Radial production by 60% in the same period.