Pirelli: Key role for Mexico plant in tariff-response strategy

Milan, Italy – Pirelli’s plant in Silao, Guanajuato, Mexico is currently playing a key role in the group's supply of tires to the US, helped by the duty-free terms of the US-Mexico-Canada trade deal.

According to CEO Andrea Casaluci, the production unit is “fully saturated,” and Pirelli intends to grow capacity there, as per its strategic 'industrial plan'.

“We are still investing in production capacity growth in Mexico and this is a mid-long-term plan,” Casaluci told investment analysts on a 31 July earnings call.

In the near-term, however, the Milan-based tire maker is trying to reduce as much as possible all the production done in Mexico not dedicated to US.

Pirelli, he said, is currently trying to free up production capacity at Silao]: reallocating European and Mexican supply to other factories which are not being subject to duties.

Operational since 2012, Pirelli’s factory in Silao most recently underwent a €115-million investment to bring up its production capacity to 8.5 million units by yearend 2025. (ERJ report)

Pirelli's leadership went on to state that a capacity expansion in the US was not on the agenda right now, in part because of capex limitations.

"When we talk about new capacity, new investments, these are [to be] deployed in the [coming] years,” explained Marco Tronchetti Provera, executive vice chairman.

As previously reported by ERJ, Pirelli currently supplies only 5% of its US domestic demand through its local facility in Rome, Georgia.

US demand is, therefore, served mainly through imports: 55% from Mexico and 40% from Europe and Brazil.

Since 3 May, the US has applied 25% tariffs on imports of car tires from Europe and Brazil, as well as a 10% universal tariff on motorcycle and bicycle tires.

The tariffs on European car tire imports will be reduced to 15% as of 1 Aug, subject to ratification.

Pirelli said it expects a €30-million net impact of tariffs on its operating results over 2025.