Regional strategy: LATAM


NAFTA
LATAM
EUROPA
MEAI
RUSSIA
APAC


Market overview

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.


Vehicle parc

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.



Tyre market

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.


Strategy

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.

2013-2016 Targets

 


 

Last revised: 19 Dec 2013