Gregorio Borgo: Focus on China's high-end tire market

Gasgoo recently interviewed Gregorio Borgo, president of Pirelli Asia Pacific.

Gasgoo.com: Pirelli plans to invest an additional 200 million U.S. dollars in its investment in Shandong Yuzhou Plant in the next two years to further expand its production capacity. How is the current implementation of this plan? In addition to expanding production capacity, what strategic investment plans does Pirelli offer for the Chinese market?

Gregorio Borgo: Since the establishment of the Luzhou plant in 2005, Pirelli has invested a total of US$400 million. In the next two years, Pirelli will invest an additional US$200 million in the plant, mainly to significantly increase the production capacity of passenger tires.

It is estimated that by the end of 2014, the annual production of car tires at the plant will increase from 4.1 million in 2011 to 10 million. In the field of industrial vehicle tires, the company also plans to increase the annual production of radial tires from 700,000 to 850,000, which will be delivered to the world's major truck tire markets including China.

In addition, Pirelli will continue to invest in tire manufacturing plants. For example, the joint venture plant in Quzhou has been producing steel cords for radial tires. The annual output of the plant is about 16,000 tons. Pirelli also invested in the construction of a large-scale meticulous mixing center. The raw materials for rubber production at the Luzhou plant will be Here is banburying. After a new round of investment, the Shandong Yuzhou plant will become Pirelli's largest global plant.

Gasgoo.com: How is Pirelli's future development in China?

Gregorio Borgo: In the future, Pirelli will continue to focus on the high-end tire market in China, which is mainly reflected in the following aspects.

The first is the high-end factory. As I mentioned before, the company will continue to invest in factories in the future, which is undoubtedly part of the high-end factory strategy.

Followed by high-end products. In April this year, the company released a new Cinturato P1 product in Shanghai. Together with the Cinturato P7, P Zero family and Scorpion series, the company will become Pirelli's high-end products for sale in the Chinese market. At the same time, the company's cooperation with F1 is also confirming our focus on R&D of high-end products.

In addition, there are high-end originals. The OEMs that have worked with Pirelli for a long time are basically producing high-end cars or supercars such as Ferrari, Maserati, Mercedes-Benz and BMW. Therefore, in the Chinese market, we have also become the original tire manufacturers for Audi, BMW, Mercedes-Benz and Peugeot.

High-end services are also an important aspect of the company's high-end market in China. By the end of 2014, we plan to add more than 2,000 retail stores. By then, the number of retail stores will expand from less than 1,000 in 2011 to more than 3,000. Through these retail stores, Pirelli will provide consumers with high-quality, high-end services.

Finally, we strive to localize people. In the future, the company will increase investment in employee training so that we can better implement high-end market strategies in the Chinese market.

Gasgoo.com: You just mentioned that a new round of investment in the Luzhou plant will be mainly used to increase the production capacity of passenger car tires. What do you think about the current domestic car tire market? For Pirelli, which continues to work in this market, what are the competitive advantages?

Gregorio Borgo: I am very optimistic about the future development of the Chinese car tire market, especially the high-end tire market. From the perspective of the development of the global high-end tire market, the Asia-Pacific region, especially the Chinese market, is one of the regions with the strongest growth momentum and fastest growth rate.

It is predicted that during the period from 2011 to 2015, the average annual growth rate of the high-end automobile market in the Asia-Pacific region will be approximately 19.1%, and the annual growth rate will be approximately 4.7%; the average annual growth rate of the high-end automobile tire market in the region is approximately 16.9%. The growth rate is about 9.6%.

In 2011, Pirelli’s share of the entire tire market was 1%, but its share in the high-end tire market was 8.6%; in 2012, these two figures are expected to be 1.4% and 12.1%, respectively.

When it comes to advantages, Pirelli's production scale is relatively small compared with other large tire manufacturers, so it can adjust production plans more flexibly and quickly to adapt to changing market demands.

On the other hand, Pirelli has been highly focused on research and development and sales of high-end products. China’s rapidly growing high-end car and high-end tire markets are in line with the company’s development strategy and provide Pirelli with an excellent opportunity for rapid and stable development.

Local R&D and production capabilities are another big advantage for us. Shandong Yinzhou Plant is the only company's production plant and R&D center in the Asia Pacific region. We are able to develop more high-end tire products suitable for the Chinese market with strong R&D capabilities.

Gasgoo.com: In 2011, Pirelli achieved a revenue of 353 million euros in the Asia-Pacific market, a year-on-year increase of 23%. What is the performance of the replacement tire business?

Gregorio Borgo: Like the original tire distribution business, Pirelli's replacement tire business has also grown rapidly in the past year. The ratio of OEM tires to replacement tires is 70% to 30%.

According to industry forecasts, China's replacement tire market will increase significantly this year along with a large number of new cars to be sold in 2008 and 2009. So we are very optimistic about the development prospect of this business.

Gasgoo.com: Pirelli plans to expand the number of retail stores in China from less than 1,000 in 2011 to more than 3,000 in 2014. In order to successfully achieve this goal, what strategies and plans will Pirelli take? How does the more than 3,000 retail stores in China have a strategic significance for Pirelli?

Gregorio Borgo: When we are planning to build new retail stores, we have to consider several points. One is the regional perspective. In the future, about 40% of Pirelli stores will open in first-tier cities, 30% in second-tier cities, and another 30% in third-tier cities. The second is the level of retail stores. We will divide high-end retail stores into Power Store, Gold and Silver according to the location of retail stores, qualifications of suppliers and distributors, etc. to better manage and provide better services to consumers.

For Pirelli, the opening of a new retail store will help the company penetrate its sales channels into major cities in China and form a comprehensive sales network. On the other hand, from the perspective of brand building, retail stores across the country will increase Pirelli's brand awareness in the Chinese market and consolidate the company's high-end tire brand image. At the same time, this move can further enhance our performance in replacing the tire market.

Gasgoo.com: On April 11, 2012, Pirelli launched the Cinturato P1 high-end series tires for large and medium-sized cars, and officially released the tires to the Asia-Pacific market. At present, whether this product has been introduced into China, how is the market sales situation? For the Chinese market, what new products will Pirelli launch this year?

Gregorio Borgo: At the beginning of this year, Pirelli's Cinturato P1 was already listed on the Chinese market. This is a tire that was introduced to meet the needs of consumers in the mid- to high-end car market in the Asia-Pacific region.

In terms of sales, Cinturato P1's market demand is very strong in terms of preliminary market performance. As of the end of 2012, we will produce 39 models of this tire, ranging in size from 15 inches to 19 inches.

Pirelli focuses on introducing the R&D concept of race tires to the civilian market. We released the first silver hard tire from the F1 race as a civilian tire in Milan last year; in June of this year, Pirelli will release the Cinturato P7 blue tire in Valencia, Spain.

In the future, we will gradually introduce more high-end tires to the Chinese market, continue to expand Pirelli's product portfolio, and strengthen the market positioning of our high-end products.

Gasgoo.com: In the truck market, Pirelli plans to increase its radial tire production capacity from 700,000 to 850,000 pieces a year this year. Which factories will increase production capacity? What is Pirelli's performance in different markets for the truck business?

Gregorio Borgo: The Pirelli radial tire products that Pirelli currently sells on the Chinese market, including inner tube products and tubeless products, are manufactured and manufactured at the Luzhou plant in Shandong. According to different market conditions, Pirelli will provide a wealth of product choices to meet the growing market demand. The company will gradually increase its investment in developing markets, and will always focus on high-performance tires.

Gasgoo.com: Pirelli strives to become a global leader in the high-end tire market in 2015. To achieve this goal, it is critical to establish brand loyalty among the consumer groups. What are the current brand marketing strategies implemented by the company and how are they implemented? ?

Gregorio Borgo: Under the brand's high-end positioning strategy, we continued to present this tire brand originating from Italy to consumers through innovative brand communication activities centered on the core elements of brands such as racing, football, fashion, and annual calendars.

Gasgoo.com: It is reported that you have been joining Pirelli for more than 20 years and have 15 years of experience in Asia Pacific market development. How do you view the development of Pirelli in China for so many years?

Gregorio Borgo: China is the fastest growing economy in the Asia-Pacific region and has become the world’s second-largest automotive consumer market after the United States. Such a unique environment and conditions have given Pirelli great opportunities for rapid development, and our development in China in recent years is also obvious to all.

We are very satisfied with Pirelli's performance in the Chinese market and we look forward to it achieving better results in the future.

Looking ahead, Pirelli will strive to become a global leader in the high-end market in 2015. In China, Pirelli will also develop along the company's established high-end routes; at the same time, we will also focus on the development and production of new products, strengthen channel construction, and strengthen The Pirelli brand's reputation and influence.