Pirelli capacity plan 'could mitigate US tariffs'

Milan, Italy – Pirelli could potentially expand its tire production capacity in the US to offset the impact of the escalating trade war within North America, executives said on a 2024 financial results call.

The Italian tire maker, they said, has a contingency plan in place to address issues around the US imposition of 25% tariffs on goods from Canada and Mexico with effect from 4 March.

While Pirelli’s US business contributed more than 20% of group sales, the level of tire production there is limited, CFO Andrea Casaluci explained on the 27 Feb call.

The group's plant in Georgia, he said, has a capacity of around 400,000 high-tech tires per year.

To meet US market demand, Pirelli imports more than 50% of its US supply from Mexico and about 40% from Brazil and Europe.

To mitigate the impact of tariffs, Casaluci said Pirelli had a contingency plan to increased imports from Brazil and increase production capacity in the US.

Pirelli, he said, has already started with a technological upgrade of the automated MIRS manufacturing processes in Georgia.

"That will be the basis for the first step of capacity expansion in the US,” noted the finance chief.

Moreover, he said, the group’s commercial policy will be reviewed based on the 'inflationary scenario'.

Casaluci pointed out that, as 30% of overall US tire demand is imported, “some inflationary pressure is to be expected” in the aftermath of tariffs.

Pirelli's contingency plan, he added, also includes cost-reduction measures, in addition to €150 million of savings in 2025, as envisaged under its industrial plan.