First of all, Pirelli could quickly benefit from the high growth potential of certain emerging markets such as India. This is generally true for several markets that should prove to be real gold mines for tire manufacturers, including China and Brazil. India remains Pirelli's favourite target because, while there are already a few small local manufacturers in the country, no major company has yet established itself there.
We are also currently witnessing significant changes in the way people consume tyres. Consumers' needs have changed significantly and they are increasingly favouring tyres with a high level of safety and grip, which is one of Pirelli's strong points.
Although Pirelli is doing everything possible to distinguish itself from its rivals, the competition in the tyre sector remains very strong and should remain so in the years to come with the rise in power of certain major brands such as JK, Apollo, Dunlop, Bridgestone, Michelon, Good Year and Cooper Tyres for the Indian market. The Italian manufacturer will still have to make a lot of effort to keep its market share.
Another threat concerns the control of the production costs of Pirelli tyres. Indeed, there is currently a significant increase in the price of raw materials, but also in technology and innovation, which could have consequences on Pirelli's competitiveness.
The Italian Pirelli Group is a world-renowned specialist in the manufacture and sale of tyres. However, its activity can be divided into two main sectors. The largest part of its turnover is of course realised by the sale of tyres, but a small part of it concerns the production of electricity by renewable energies.
With 22 production sites around the world, Pirelli serves the Italian, European, American and Asian markets.
The price of Pirelli shares is currently quoted on the Italian stock exchange MTA. Its quotation is included in the calculation of the FTSE MIB stock market index.
Photo credits: ©razgulyaev/123RF.COM
The Pirelli group has to face the daily threat of some very aggressive competitors, of which we propose to give you a quick presentation here:
This first competitor is of course a Japanese tyre manufacturer which was created in 1931 and which has since become one of the giants in this sector. Indeed, this international company is currently one of the most important tyre groups in the world and is even ahead of Michelin.
Another group to be monitored in the context of Pirelli's competition analysis is the Goodyear and Rubber Company group, which is an American company that has been in existence since 1898. The group is currently the third largest tyre manufacturer in the world and produces tyres for cars, aircraft and trucks. The company is also active in the manufacture and design of belts, hoses and other rubber products, as well as chemicals related to the rubber industry.
Finally, the third and last competitor of the Pirelli group is none other than the world leader in this sector of activity, namely the French group Michelin. This French company based in Clermont Ferrand designs and markets products for all types of vehicles such as cars, trucks, two-wheelers, airplanes, civil engineering equipment and agricultural machinery. This multinational company is also listed on the French CAC 40 index and has industrial operations in many countries. It currently employs over 111,700 people.
If the Pirelli group has many enemies in its sector of activity, it also has some partners and regularly sets up strategic alliances with other companies or with the aim of enhancing itself and gaining growth. Here are two concrete examples of recent partnerships that the group has put in place.
One of the longest partnerships that the Pirelli Group has established is undoubtedly the one signed with the Maserati Group, which has lasted for a century. In fact, the two companies began their collaboration at the beginning of the last century. At that time, the tyres developed by Pirelli were still called "Stella Bianca". It was also at this time that Giuseppe Campari won the French Grand Prix in 1933. But it was the 250F single-seater equipped with the brand's tyres and driven by Fangio that undoubtedly earned the tyre brand its current recognition.
In 2019, the Pirelli Group has collaborated with the French Grand Prix. The group has indeed become the official sponsor of this world F1 event for the second consecutive year. The eighth round of the Formula 1 world championship took place on the famous Paul Ricard circuit in June this year. Pirelli has been a partner of Formula 1 since 2011 and the renewal of this contract makes it its partner until at least 2023. But as for the other partnerships that Pirelli has been able to put in place as a sponsor in Formula 1, they are much older and even go back to the 1950 world championship.
Before implementing any long-term investment strategy, it is necessary to understand the capacity of a stock to attract new buyers in the months and years to come. These capacities are directly linked to the future profitability of the company and therefore to its ability to face future challenges. To obtain such information, it is ideal to know the strengths and weaknesses of the company. In the case of the Pirelli Group, we will help you analyze this data by first summarizing the main strengths of this company, which are listed below in detail. We will then come back to the shortcomings of this group.
Having reviewed the various strengths of the Pirelli group, it is necessary to compare these strengths with the weaknesses of this company in order to have an objective overall view of its ability to face the future with confidence. The following is a summary of the main weaknesses of this group with some additional explanations.
Since 2015, Pirelli's parent company has been the Chinese group ChemChina, which acquired the Italian company for €7.1 billion by buying out the 26.2% stake in Pirelli held by the holding company Camfin and launching a public bid for the remaining share capital of the company through a company combining ChemChina and Camfin. Following this acquisition, the industrial tyre manufacturing business was transferred to Aesolus Tyres, another subsidiary of the Chinese group.
Obviously, in order to strategically support its own growth, the Pirelli Group has invested over the years in the acquisition and creation of several subsidiaries that still allow it to guarantee different types of activities throughout the world. The subsidiaries currently owned and operated by Pirelli are: Pirelli Tyre, Pirelli Labs S.p.A., Pirelli & C Eco Technology S.p.A. and Pirelli Ambiente S.p.A.
In order to speculate most effectively on the Pirelli share price, you need to perform different types of analysis of its price to identify the strongest trends. We strongly recommend combining technical analysis, based on the historical stock charts of this stock, with fundamental analysis, which is essentially based on the study of the publications and news that are most likely to influence the stock.
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