Saudi Arabia’s Public Investment Fund (PIF) and Pirelli Tyre have announced today the signing of a joint venture agreement to build a tyre manufacturing facility in the Kingdom.
PIF will hold a 75 per cent stake in the new JV with Pirelli holding the remaining 25 per cent and acting as a strategic technology partner to support the development of the project by providing technical and commercial assistance.
The plant is expected to start production in 2026.
PIF and Pirelli to make tyres in Saudi Arabia
The facility will manufacture high-quality tyres for passenger vehicles, under the Pirelli brand, and will also manufacture and market tyres under a new local brand targeting the domestic and regional market.
The total investment in the venture is around $550m.
For Pirelli, the project will have a neutral impact on the company’s deleveraging targets to 2025.
A PIF statement said: “Saudi Arabia is set to become a global automotive manufacturing hub by 2030.
PIF has established a world-class automobile sector in Saudi Arabia by driving transformation and boosting manufacturing capabilities, infrastructure and supply chains in Saudi Arabia and beyond.”
Pirelli will offer technical support and expertise to design, develop and operate the plant.
Through this JV, PIF and Pirelli are committed to creating a national and regional champion that localises manufacturing capabilities for an important segment in the automotive industry, while enabling upstream and downstream activities across the value chain.
The plant is expected to generate an annual production capacity of 3.5 million units, bringing additional economic benefits and complemented by a commitment to environmental sustainability.
The JV will also serve as an important anchor to attract further investment to Saudi Arabia.
In line with its local-for-local strategy, Pirelli, through the JV, will become the first tier 1 tyre maker to directly source production in Saudi Arabia.
Deputy Governor and Head of MENA Investments at PIF Yazeed A. Al-Humied, said: “Through this Joint Venture with Pirelli, PIF is building production capabilities in the automotive and mobility value chain and enhance opportunities for private sector contribution.
“This collaboration marks another pivotal milestone in our journey to diversify the economy, enhance sustainability and localise manufacturing capabilities in Saudi Arabia”.
Executive Vice Chairman of Pirelli Marco Tronchetti Provera, said: “Accessing local production in Saudi Arabia, one of the most promising markets today, in line with our positioning in High Value and electric, represents a great opportunity for Pirelli.
“Capturing it alongside a partner like PIF with its plans to enable the automotive sector.”
The closing of the transaction is subject to obtaining approvals from the relevant authorities and satisfying certain conditions under the agreement.
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