NEW YORK—Pierluigi Dinelli, Pirelli Tire North America Inc.'s new chairman and CEO, has a list of strategies to achieve his goal of growing the Pirelli brand in North America.
Among the items on his to-do list are:
• Develop a wider range of products dedicated to the market, especially light truck tires;
• Focus on a consistent strategy to strengthen the partnership with customers;
• Increase production at the company's Silao, Mexico, tire plant; and
• Overall, increase the Pirelli brand presence in the U.S. market.
“In order to grow our presence and our market share, we need to have product available,” Dinelli said at the recent New York International Auto Show.
Dinelli, who took over the helm of the company's NAFTA region Jan. 1, wants to improve the tire maker's fill rates and expand its fitments portfolio in the U.S. and Canada through a boost in production at the the Silao plant, which opened in 2012.
“In order to grow, we need to boost production,” he said.
Pirelli posted sales last year in North America of $960 million, or 12 percent of Pirelli & C. S.p.A.'s global revenue. This was up from 11 percent in fiscal 2013, according to Pirelli data, which represents sales growth of roughly 8 percent.
The Silao plant has been ramping up production steadily, he said, increasing the number of units produced by 1 million over its 2014 annual rate. Next year the plant will increase its annual output by another 1 million units, he said.
Nearly all the units produced are shipped to the U.S. and Canada and split evenly between original equipment manufacturers and the replacement markets. He said the plant is receiving increased orders from car makers that prefer the Silao plant's modern equipment and proximity to the U.S.
But boosting output won't be enough. Dinelli said the company also needs to expand its range of products and vehicle applications—particularly for light trucks, and especially for all-terrain use.
“Our range is not so deep on different sizes,” he said. “To increase the breadth of our range, we need to develop more, we need more products in the American market.”
Since Pirelli's share of the North American market is small, “our biggest effort will be to grow our share of customers.” Dinelli acknowledged the company needs more significant growth of product range.
“If we are missing segments, we can't grow our customer accounts.”
He said Pirelli is focusing on product development of all-terrain tires for off-road use and plans to launch applicable tires in mid-2016. “That should give us a big boost,” he said.
The company's focus now is promoting its new Pirelli P Zero All Season Plus, a tire developed specifically for the U.S. market. The company's biggest challenge, he said, is to increase sales of that tire in the second half of the year.
The company is increasing its social media marketing efforts, as well, but has no plans to sell tires directly via the Internet.
“We do not foresee opening up Internet sales. We have so much space to grow in the traditional market that we want to avoid conflicting with our dealers. It isn't going to be beneficial for us to go online,” Dinelli said.
“The Internet is an extraordinary vehicle, but we want to be a producer and leave the market to the traditional tire dealers.”
He noted that in the past the company tried to sell tires, particularly motorcycle tires, online in other countries, but “honestly, it had never been successful,” he added. “We don't want to do it in the U.S.”
Dinelli reiterated Pirelli's commitment to the “traditional” type of tire dealerships—stressing that the company will not operate company-owned retail outlets or market through mass merchandisers.
“We are satisfied with our customer base,” he said.
Pirelli is “extremely satisfied” with its FasTrack associate dealer program launched in 2013, Dinelli said, noting that about 900 dealers have joined the network.
“We are satisfied with the program. The program has grown rapidly,” he said, reiterating that the company needs to also invest more in supporting its dealer network, including promoting its products.
On the OE side of the ledger, Pirelli recently received the highest score in the performance sport segment in the J.D. Power 2015 Original Equipment Tire Customer Satisfaction Study, earning the top spot for the second straight year.
“It is a true honor to be recognized once again as the highest ranked tire in the performance sport segment in this year's J.D. Power OE study," Dinelli said. "We're thrilled that Pirelli tires have received that vote of confidence from consumers in North America, where we have been strongly committed to bring Pirelli's trademark R&D, technology and premium quality into products that are relevant for their driving needs and the market.”