Pirelli is consolidating its position in Argentina and will invest US$100m at its Merlo facility, in the province of Buenos Aires, by 2013.

The plan, aimed at increasing production capacity and strengthening Pirelli’s position in Latin America, is part of the company’s international expansion strategy which, in recent years, has seen it progressively increase its direct industrial presence in markets it sees as offering the highest rate of growth, as well as competitive costs.

Of the 20 production sites that make up Pirelli’s industrial base, seven facilities are located in South America (one in Argentina, five in Brazil, one in Venezuela) and generate 36% of Pirelli Tyre’s total sales, with an output covering all segments: car, industrial vehicles, motorcycles, agricultural and worksite machinery.

The Merlo factory, where Pirelli has operated since 1951, produces over 5m units annually for the entire car, SUV and light truck range and today accounts for 10% of the group’s total production in Latin America and 20% of car tyre production in the area.

The company said that strengthening its presence in Argentina, in particular, guarantees Pirelli an important base from which to satisfy both increasing internal market demand, which will absorb about 50% of production, and demand from significant export markets, principally Brazil and the other South American markets and the USA. 

About $20m dollars will be spent this year, which will go to technological and quality improvements, as well as increasing capacity, which is estimated to rise by 1m units to over 6m annually by 2013. In particular, the increase in production capacity will entail the doubling of production in SUV and light truck segments which typify the Argentine auto market.

By the end of 2010, Pirelli’s sales in the country are expected to grow by 55% to $365m with a target for 2013 of $500m.

After the slowdown in 2009, the Argentine car market is experiencing an increased dynamism linked to the performance of the internal market.