Pirelli quits one of two JVs with Russian Technologies

London -- Pirelli will only form a single joint venture with Russian Technologies, instead of the two previously announced. Marco Tronchetti Provera told analysts that the second joint venture is no longer being discussed. In response to a question from ERJ, Tronchetti said the JV is frozen, and Pirelli is available to supply technology if the venture should be revived.

Pirelli's activities in Russia will now focus on a single joint venture covering three factories. One plant is in Kirov and  two in Voronezh. The venture is now signed and Pirelli owns 50 percent, while Russian Technologies owns 24.99 percent and the Fleming family owns the remaining 25.01 percent.

The two Voronezh plants are jointly expected to produce 2 million units of premium passenger cars in 2012, increasing to 4 million in 2014, and by 2015 will produce only Pirelli brand tyres. To achieve this, Pirelli will invest euro 100 million in the period from 2012 - 2014. Investments will cover a new mixing room, new finishing area and improved quality control.

The two factories in Voronezh are adjacent to each other. One was built many years ago and is fitted with old equipment. The other was specified y Vredestein engineers before their Russian partner, AMtel_vredestein went bankrupt. The buildings were finsihed, and equipment purchased, but the equipment was not installed and no tyres have been produced. 

The Kirov plant will receive a similar level of investment in the same period. In 2012, the Kirov plant is expected to produce 6.5 million units, in mixed brtands. Pirelli expects the plant will make 60 percent Pirelli brand tyres by 2015. IOnvestments include a new mixing room, new finishing area and improved quality systems.

Overall, said Pirelli, 80 percent of sales in Russia and CIS region wil be produced in Russia by 2015. Marco Tronchetti Provera, CEO, said Pirelli will exit the 'C' segment of the market immediately and focus mainly on the 'A' segment with some activity in the 'B' segment.