Pirelli to gain control of Chinese joint venture

Pirelli intends to increase its stake in Jining Shenzhou Tire, based in Jining (Shandong, China), from 49% to 70%. This was stated by the CEO of Pirelli, Andrea Casaluci, whose words are quoted by ERJ.

The plant is a joint venture with the local company Hixih Rubber Industry Group, and Pirelli bought 49% of the shares in 2018 for 75 million euros with the right to increase the stake. "We plan to exercise this option to gain full control over the enterprise and use its production capacity," Casaluci said, adding that the company values "the opportunities for development that have been created due to the rapid growth of the electric car market".

According to him, Pirelli also intends to develop relations with Chinese electric car manufacturers. "We are expanding our customer base by partnering with new successful premium segment players in the Chinese market," he noted.

Pirelli adds that the impending deal is expected to have no significant impact on the company's revenue in the short term, since the plant is already producing tires for the Italian brand.

"In 2026, we do not expect a significant impact on sales, since most of the production is already accounted for in our turnover," said Casaluci. "The enterprise produced tires for us, which we bought and resold".

At the same time, gaining control over Shenzhou Tire should lead to "a small improvement in profitability", as costs decrease. In general, it is expected that the impact of the acquisition of new assets on Pirelli's financial performance will be "moderate, but positive".

According to information from Hixih, the total investment in Shenzhou Tire amounted to approximately 3.5 billion yuan (510 million dollars), and the enterprise is capable of producing up to 12 million tires for passenger cars per year. Production was launched in 2018.

The company adds that the plant "provides Pirelli with the necessary flexibility to respond to changes in market trends in China and meet the growing demand from electric car owners, as well as the constant development of cooperation with car manufacturers in China, Japan, and South Korea".

Apparently, Pirelli will not limit itself to buying out shares, and the administration of Yanzhou, a district under the jurisdiction of Jining, reported that it is planned to increase the enterprise's capacity by a third, i.e. by 4 million passenger car tires per year.