Commitment to the truck tyre segment
September’s official launch of numerous additions to the Pirelli :01 Series presented Tyres & Accessories with the opportunity to visit the Italian manufacturer’s production site in Izmit, Turkey, where some of the range is produced alongside passenger car and motorsport tyres. It also gave us the chance to sit down with Ugo Forner, who has worldwide responsibility for Pirelli’s ‘Truck’ business unit, and listen to his views on Pirelli’s plans and the changing nature of the global commercial vehicle business.
TYRES AND ACCESSORIES: In some global regions Pirelli is a strong competitor in the truck segment, and in areas such as South America or some Mediterranean countries Pirelli is on top of the market. In other places – like North America and Central Europe – the company has remained a niche player in the truck tyre segment. Why is this?
UGO FORNER: If we want to grow in a market, we have to make big investments, not only for products and their production, but also for service. Such investments are a constant subject of discussion; to this end we discuss not only the size of an investment, but also when the right time to invest is. When you speak about Central Europe, our new 01 Series and particularly our W-line winter tyre shows a clear commitment to this market.
TYRES AND ACCESSORIES: In so-called “emerging markets”, such as South America or Turkey, Pirelli is a significant player in the truck tyre business. But in these countries cross-ply tyres – an outdated technology – hold a very high market share. What then is Pirelli’s approach to these markets?
UGO FORNER: Our focus is directed on steel belted and tubeless tyres, this applies to all markets worldwide. Admittedly, we serve some markets with limited quantities of cross-ply truck tyres, but we aren’t making investments in this area. Rather, these old technologies are being successively replaced with modern radial ply tyres whenever the market seems ready for this.
TYRES AND ACCESSORIES: As Pirelli recently announced, the company will soon enter the Russian market in a much stronger way and will manufacture there, amongst other products, truck tyres. Other major market players have announced their intention to invest strongly in the Indian truck tyre market, yet Pirelli chairman Marco Tronchetti Provera described India’s infrastructure as being still in its infancy. When will Pirelli stop bypassing this market, which now has a 20 per cent radialisation rate?
UGO FORNER: We think this day is coming. But today the Indian market seems to be a black-and-white-scenario: Some branches of economy are growing very well while others remain on a weak level. That said, when we do enter the Indian market, there is a high chance we will first enter it with truck tyres and then afterwards with car tyres.
TYRES AND ACCESSORIES: When looking at Pirelli’s latest technologies in the truck sector, would you say a certain similarity can be seen between Pirelli’s and the market leader’s technologies?
UGO FORNER: We compare ourselves with all relevant competitors and look at what they are doing technologically. Our competitors do this too, it’s normal. We strive to approach technical decisions reasonably and shut down emotions. This way a product emerges whose performance can be measured and compared with other manufacturers’ products. The market decides if our product is credible. But no one can avoid mistakes; let me give you an example: when we entered the Chinese market, we simply underestimated the problem of truck overloading and afterwards we had to work to correct this.
TYRES AND ACCESSORIES: There is no argument that Pirelli has acquired a large number of homologations, but in the original equipment business the company seems strongly focused on Iveco. What about the other large truck producers, such as Mercedes, Volvo, MAN or Scania?
UGO FORNER: It is true we only have a small share with the abovementioned European vehicle manufacturers. On the one hand we can’t deny we are less strongly represented north of the Alps, but on the other hand our production capacity is limited. Therefore, we currently couldn’t take on significantly larger quotas. Our view is, the stronger the market position within a country, the larger a proportion original equipment should account for. But it’s a global business and because of our strong presence in South America we also deal with the larger truck producers such as Mercedes, who are well represented in both continents.
TYRES AND ACCESSORIES: Generally speaking, tyre production facilities, such as Pirelli’s Settimo truck tyre plant in Italy, are highly specialised these days. In Izmit it’s a completely different story – car, light commercial vehicle, truck and even motorsport tyres, plus steel cord, are manufactured there.
UGO FORNER: This is for historical reasons: In the 1960’s, when we established our tyre factory in Turkey, other conditions ruled and they were very strongly oriented towards the needs of the local market: We produced what the Turkish market wanted. While tyre plants are increasingly specialising for a number of reasons, today Turkey finds itself positioned in the middle of a sales market that extends from the Middle East to Central Europe. And the factory in Izmit (which was extensively damaged by an earthquake in 1999 and returned to production just half a year later) has been transformed and further developed over the years.
TYRES AND ACCESSORIES: During the last few years we have witnessed growing numbers of very cheap tyres for trucks being shipped from the Far East to Europe and North America. What do you think about their quality?
UGO FORNER: We note that some competitors have markedly improved; they’ve invested a significant amount in modern production equipment. However other suppliers from the Far East have fallen further behind. And it shouldn’t be forgotten that tyre production costs are also increasing in the Far East, therefore their advantage is shrinking; this is incidentally something we’ve also observed at our own truck tyre factory in China. We thus anticipate more of a polarisation between the better and other Far East providers, a trend the implementation of tyre labeling will only strengthen.
TYRES AND ACCESSORIES: Chinese commercial vehicle manufacturers are gaining a presence in some countries. Won’t they utilise Chinese suppliers?
UGO FORNER: We expect this will be the case. The vehicle manufacturer Volvo already is Chinese hands. Furthermore, the joint-ventures that Western automotive manufacturers have established in China will not be one-way streets. One day the Chinese partner will say: We helped you get established in our market, now we want to expand out into the world. This is understandable and, if you ask me, it will first begin in the car sector – but then it will extend to the commercial vehicle sector.