Pirelli and Astra Otopart to set up 4-wheeler factory - Exclusive | Company data
(The Insider Stories) – Italy’s Pirelli & Co SpA (PC) is in intensive discussions with leading Indonesian automotive components maker PT Astra Otopart Tbk (AUTO) to build a four-wheeler factory in Karawang International Industry City, with development expected to start in 2014.
Astra Otopart’s President Director Siswanto Prawiroatmodjo said total investment could be higher than $120 million it is spending on another factory.
Pirelli seeks presence in world’s biggest moto market
Pirelli and Astra Otopart in April established joint venture company (JVC) PT Evoluzione Tyres to build a new motorcycle tyre factory in Indonesia that will cover 25 hectares and when fully operational in 2016 will employ 750 people, according to company statements.
The JVC is 60% owned by Pirelli 60% and 40% by Astra Otoparts and will invest a total of $120 million dollars between 2012 and 2014 to build a new factory. The factory is expected to become operational from the second half of 2013, with estimated production of around 2 million conventional motorcycle tyres in 2014 and when fully operational in 2016, could produce 7 million tyres.
It will sell 3 million of the tyres under Astra brands, while the remaining 4 million – equal to about 25% of all Pirelli’s moto production in the world – will carry Pirelli brands (Pirelli or Metzeler). “In the context of the group’s ‘local for local’ strategy, 20%-25% of the Pirelli brand production made in the Indonesian plant will serve the original equipment and replacement markets of the Asia Pacific area, where the moto market is forecast to grow at an average annual rate of 3.5% from 2011 to 2014,” with the remaining output serving all other markets where Pirelli operates except South America, it says.
Pirelli plans to increase output to 16 million tyres in 2015 from 13 million in 2011 and is seeking a direct presence in the biggest economy in Asean, which is the biggest motorcycle market in the world with around 250 million motorcycles, 68 million of which are in Indonesia, where motorcycle demand is growing more than 10% a year. Tyres produced in Indonesia are free of export duties to Asean markets and reduce the cost of raw material supply as Indonesia is a major natural rubber producer, it says.
Founded in 1872, Pirelli is the fifth-biggest tyre maker in the world by sales and says it is a leading producer in the high and ultra-high quality segments as it invests 3% of total revenues (EUR5.6 billion in 2011), or 7% of premium segment revenues, in R&D. Its 21 facilities in over 160 countries employ around 34,000 people. It has been active in automotive sports since 1907 and is the exclusive supplier of the Superbike world championship and mono-brand championships, as well as the sole supplier for the Formula 1 championship for 2011-2013.
Astra Otoparts is Indonesia’s biggest automotive component producer and makes parts for the original equipment (OEM) and replacement markets (REM). Most major global car and motorcycle makers are Astra customers and has representative offices in Singapore, Dubai and Australia. It employs 33,000 people and was has been listed on the IDX since 1998, with consolidated revenue of IDR7.36 trillion in 2011.
