Pirelli sets up joint venture in Indonesia to build new tyre plant image

Pirelli, the world’s fifth largest tyre manufacturer, announced plans to build a new plant in Indonesia together with PT Astra Otoparts, the country’s largest automotive components group. Pirelli will set up a joint venture with the Indonesian company and will take a 60 percent stake in the factory, which will cost around $90 million to build.

The remaining shares will be owned by PT Astra Otoparts. The plant will start production in 2013 and will focus primarily on motorcycle tyres. The company expects the facility will reach full production by 2016.

Production capacity is rated at 7 million units a year, which will be sold both on the domestic market and on developing markets in the region. Pirelli aims to sell 2 million tyres a year in Indonesia, which is a booming market for motorcycles. Over 7.5 million motorcycles are estimated to be sold in Indonesia for 2011. The rest of the local Pirelli tyre production will be destined for export. The Italian tyre anufacturer plans also to produce passenger vehicle tyres at a later stage.

One of the main reasons for which Pirelli chose Indonesia as a production base is that the country is rich in natural rubber, a key ingredient for manufacturing tyres and many other automotive products.

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