Tokyo, December 2, 1998 - Pirelli Tyres announced today a
joint venture agreement with Abe Shokai to jointly operate in the
Japanese market. This commercial joint venture, which will address
the replacement market, will strengthen Pirelli’s operations in
Japan, where it is one of the leading imported brands and n01 in
High Performance car tyres.

The joint venture, which will be managed and controlled at 51% by
Pirelli Tyres, and for the remaining 49% by Abe Shokai, will market
and distribute car, recreational, motorcycle and agricultural tyres
in Japan: the objective is to double sales volumes to over 600,000
units by the year 2000. Through the new company, Pirelli will
directly distribute tyres to the local market, with a network of
approximately 100 point of sales and over 2,000 indipendent tyre
dealers throughout the country, thus improving its commercial
efficiency and effectiveness.

This new initiative will be supported by a global investment of
approximately 1.7 billion Yen (over 20 billion Lira), the largest
Italian investment in Japan in the current year.

With this joint venture, Pirelli aims at improving its marketing
and sales effectiveness, rationalizing the logistics system by
centralizing order taking and delivery, and fortifying marketing
and promotional activities.

Tyre distribution in Japan is undergoing a thorough transformation
and modernization, with the growing of autosupermarkets and
franchising shops with a strong focus on customer service. The new
joint venture thus allows Pirelli a closer presence in one of the
most demanding and innovative markets in the world.

Pirelli Tyres has been present in the Japanese market since the
late Sixties, through its sole distributor Abe Shokai, with a
strong focus on the top of the range tyres, thanks to which it has
gained an exceptional brand awareness and a high profile image. It
currently sells a complete range of products, including P6000,
Pirelli’s biggest success tyre in the high performance segment for
saloon cars, and PZero, Pirelli’s fastest tyre fitting supercars
and sportcars from Ferrari to Porsche.