Pirelli & Cie SpA and Aeolus Tyre Co. Ltd. signed a letter of intent to set up a joint venture to manufacture radial truck tires in the Henan Province of China in the first half of 2005.
Aeolus Tyre is a public company listed on the Shanghai Stock Exchange. It is one of the largest tire manufacturers in China.
The new joint venture plans to start with the production of radial truck tires, mainly for Chinese domestic consumption and for export to other countries of South East Asia. Building new radial passenger tire and steel cord plants will follow.
"We have identified in Aeolus Tyre a high profile partner with all the necessary qualities to succeed in this joint venture," says Francesco Gori, general manager of Pirelli´s Tyres Sector. "Pirelli is a technology leader in radial tires worldwide and we intend to be among the key players at this time of strong growth of the radial tire business in China."
"We are confident that this partnership will offer us the opportunity to meet the increasing demand for radial tires in China, as a result of the rapid growth of the automotive sector," says Cao Chaoyang, chairman of Aeolus Tyre Co. "Pirelli and Aeolus will therefore give an important support to modernize our country."
Pirelli´s overall investment in the plants over the next three years amounts to more than 150 million euros. Thanks to this joint venture, Pirelli also will increase its current worldwide production of truck tires by 33%.
China is the fastest growing tire market in the world. According to Pirelli, in the first half of 2004 alone, the production of radial tires increased by 28.5% with respect to the same period last year.
Total radial output was more than 38 million units, which represented more than 60% of the overall domestic tire production.
This transaction is subject to the approval of the competent "Chinese Authorities." Pirelli is advised by HSBC.
