Responding to a questionnaire sent by Tire Business, Andrea Casaluci, general manager of operations for Pirelli & C. S.p.A., said the company will continue to focus on high-value tires as the prestige and premium markets continue to grow.
Q: With the year nearing its halfway point, how would you describe the state of Pirelli in 2018?
A: The growth in profitability recorded in the first quarter was proof of the validity of our strategy, and as a result we were able to confirm the targets for the full year despite the slowdown in some markets and the high volatility of exchange rates and raw material costs. So we are on track with the guidelines set out in our Industrial Plan for 2017-2020.
In particular, Pirelli is getting stronger in the high-value segment, which includes prestige and premium, as well as specialty tires, and we are progressively reducing our exposure to the standard segment. This is our high-value strategy, which also involves the further strengthening of partnerships with prestige and premium car makers and increasing our high-value production capacity and extending the distribution network coverage, which now stands at around 14,500 points of sale worldwide.
And we are more and more focused on developing new products that meet the emerging needs of the end-customer, such as the Velo range for bicycles and cyber smart tires. Cyber technologies are the most recent chapter in Pirelli's Perfect Fit strategy, focused on the development of made-to-measure products and services that meet the personal requirements of drivers as well as the specializations of car manufacturers.
Perfect Fit solutions also include the P Zero Color Edition and the development of specific tires for individual cars—denoted by special markings on the sidewalls (with different markings for each manufacturer)—and our specialties like Seal Inside, Pirelli noise canceling system and so on.
Q: What are some of the pleasant surprises you are seeing in the market? What has surprised you most?
A: Pirelli was able to identify certain emerging market trends at an early stage, and these are now consolidated. I am referring to the constant increase in variety of product offerings driven by the demands of consumers who themselves are always more diversified.
They are concerned with, among other things, safety, extended mobility, environmental impact and noise reduction. To these we need to also add demands of car makers who want to contain CO2 emissions, optimize aerodynamics and reduce noise.
Pirelli has shown that it can deliver solutions for all these demands, which guarantees the creation of value for clients and, as a consequence, for us.
Q: Where do you see industry markets headed in the second half of 2018?
A: Our analysis looks beyond the year and is the basis for the 2017-2020 business plan. Over the three-year period—and we are already seeing the trend in 2018—we expect 9 percent market volume growth in the high-value segment, which is already outperforming the standard market by a factor of 8, in line with growing demand for premium and prestige cars and the growth of new forms of mobility, such as the electric and hybrid vehicles.
Thanks to our "consumer centric" approach, we are also developing products that are more and more "tailor made," such as "Connesso" and "Cyber Car," our latest smart tire products for replacement and original equipment channels.
Q: What trends are you seeing in the marketplace? How are you reacting to them?
A: The markets are moving toward higher rim sizes and high-value tires in sync with new car technologies. We are following these trends with new products and processes and, as a result, have increased our homologation portfolio to more than 2,150 prestige and premium homologations, as well as launching tires with an embedded sensor, such as Pirelli Connesso, which enables the communication of data, via a cellphone app, regarding tire wear, pressure and temperature. It also includes the offer of personalized services, such as car valet and remote assistance.