Pirelli to use F1 as part of aggressive expansion programme

By David Shaw, ERJ staff

Pirelli Tyre has won the contract to supply all Formula One teams for three years from 2011. The company expects to use the deal primarily as a means to promote the Pirelli brand in developing parts of the world. This will form a key part of the company's aggressive new three-year strategic development plan, due to be presented to analysts in November this year.

Not only is the plan to use F1 as a promotional tool, but the company says the F1 contract is cost-neutral. Previous estimates of F1 tyre sponsorship have ranged from $100 million to $200 million annually.

Marco Tronchetti Provera said, “At the end of the day, the cost for us, taking into account all items is zero compared to our budget.” He said the company will reduce its advertising and sponsorship spend in other race series to compensate for the increase in the F1 area.

Francesco Gori, head of Pirelli Tyre said the company will sell its tyres to the F1 teams, and that this represents a very different commercial picture from that which existed when Pirelli was last involved in F1, back in 1990.

He added that current tyres on F1 cars are 50-series on the rear tyres and even taller on the front tyres, which does not match the aspect ratios seen on road-going high-performance cars. The aim, said Gori, will be to work with teams and show them how the performance and handling can be improved with lower aspect ratios. He said Pirelli hopes to move F1 tyres to 40-series over time. He emphasised that any evolution would be progressive and steady, rather than step changes. “you cannot move from F1 13-inch based chassis to an 18 inch [tyre] in just one season, so probably the evolution will go by steps.”

Gori also said he does not expect Pirelli to develop new technologies specifically for F1, but to use existing ideas and innovations and put them together in new ways to deliver high performance tyres for the teams.

Nevertheless, although the performance of tyres in F1 is paramount, the main benefit to Pirelli, said Gori is in brand-awareness and brand promotion in regions such as China, India, the Middle-East and other potential growth areas. He said there is no need to promote the Pirelli brand in Europe or North America.

Gori said the company expects to unveil a three-year strategic plan in November, and this will be strongly focussed on growth. Gori said it is , “a very ambitious investment plan.” The F1 deal is likely to form a significant pillar in that plan, focussing on growth of high performance tyres in developing parts of the world. Tronchetti Provera said that the F1 series in 2009 attracted 2 billion viewers, many of them in fast-growing markets, such as China, the Middle East and Asia. Gori said, “ younger people in the population (of these countries) may not know Pirelli as well as our European customers and South American customers.”

Pirelli said the tyres will be designed in Milan and constructed in the company's motorsport factory in Izmit, Turkey. That unit began producing rally tyres in 2006 and has a production capacity of 240,000 tyres per year. The factory's total area is 426,500 square feet and 32,800 square feet is dedicated to its motorsport activities, which employs 100 personnel. Tronchetti said the plant would not need to be expanded to absorb the F1 requirements.