Tom Gravalos
CEO
Pirelli
/
View from the Top

High Operating Standards for Renowed Tire Company

Tue, 09/15/2015 - 14:01

Q: What have been Pirelli’s main achievements and toughest challenges since establishing the plant in Silao?

A: Pirelli Mexico continues to grow at a double-digit pace. We have strong relationships with car manufacturers and we already have contracts to supply many companies that are entering the Mexican market. Our replacement tire business has also grown at a double-digit rate, and we now have significant presence in terms of Pirelli branded points of sale. When Pirelli announced its investment, we wanted to increase our revenue in the premium segment from 55% to 66% in the NAFTA region, resulting in faster growth in this segment than with other products. Currently, the premium portion represents half of our Mexican business, which translates to higher revenue. Our tires are present on vehicles manufactured by OEMS such as Audi, Bentley, BMW, Cadillac, Ferrari, Jaguar, Lamborghini, Land Rover, Lincoln, Maserati, McLaren, Mercedes-Benz, and Volvo, because we help these car makers deliver the best possible performance.

Q: How is the brand participating in the development of a new generation of technology?

A: Pirelli wants faster, quicker, and more agile cars that use less energy, so we are helping car makers to improve rolling resistance. This results in using less fuel, as well as improving elements like braking, handling, and steering, as the quality of the tire can seriously impact the vehicle’s performance. Depending on the car and the road, tires could create a difference of up to 7% or more in fuel economy. If we consider the thousands of miles that cars travel in a lifetime, this becomes a major factor. Car makers have certain expectations regarding traction, handling, noise, and comfort, so all of this has to be included in the tire’s design. This year we launched the P Zero All Season Plus tires, which have leading technology that provides better handling, less rolling resistance, and more durability. To produce millions of tires you need to have a good technological process, which directly relates to how our new plant has evolved. Last year, we produced almost 2 million tires and this year we will grow to almost 3 million. By July 2015, our total production had reached 5 million tires, and our goal for 2017 is to produce 5.5 to 6 million tires per year.

Q: How is the tire market currently evolving, and what links this evolution to Pirelli’s production rates?

A: Most of the tires we produce in Mexico stay in the NAFTA region. From our Silao plant we supply Volkswagen, BMW, Mercedes-Benz, Ford, Lincoln, and the Chrysler group. Some of our tires are designed for cars with speeds of up to 320 km/h, and we have produced tires for the Ford Mustang’s 50th anniversary edition, as well as for the Dodge Challenger Hellcat. These cars have really specific standards, so to be able to deliver the proper product we must have an extremely modern plant with highly stringent manufacturing standards.

An interesting development is the introduction of electric vehicles, which include a variety of challenges because they are much more sensitive to rolling resistance. Sizes will start to change and we will likely see taller and slimmer tires on mass consumption electric vehicles. Electric cars have instant torque, which brings new demands for car and tire manufacturers. If left unmanaged, this could cause rapid tire consumption, so there needs to be a joint design process between car and tire producers.

Q: What does the return of Formula 1 to Mexico represent for Pirelli?

A: Formula 1 gives Pirelli a chance to demonstrate its technology with the most extreme performance conditions. In addition, Pirelli has made the Formula 1 viewing experience much more enjoyable for fans. The teams have to figure out their strategy around our products, the engineers have to figure out how to get the most of the vehicle with these tires, and the drivers need to learn how to manage their tires along with the rest of the car. This relationship has been beneficial for Pirelli and we hope it has been the same for Formula 1.

Pirelli is a sporty, fun, and energetic brand that develops high technology. We are an added value for car manufactures, and we have worked hard to obtain that recognition. As a premium tire manufacturer, our focus is on improving vehicle performance, while devloping the best car-tire experience with our clients. Pirelli knows that if clients enjoy and appreciate our approach, we will have a better chance of selling the replacements when the time comes.