By Alex Kapadia
When Pirelli agreed to design tyres that degrade quickly for Formula One, there were concerns it could have backfired from a commercial point of view.
But according to a report in the Financial Times, the paradox of producing a fast-wearing tyres for the glamorous sport is enhancing the Italian company’s reputation and sales are increasing.
The new tyres, which have been designed to last no more than 20 to 25 laps, have made the racing more challenging for the drivers and added extra entertainment value for spectators.
Formula One boss Bernie Ecclestone has praised Pirelli for taking on the challenge, which he its rivals Michelin and Bridgestone had refused to develop such tyres because they were worried about their image.
According to the Financial Times report: “Road cars and tyres are supposed to be reliable, durable and safe. And it is no coincidence that Michelin has been running an advertising campaign proclaiming the benefits of their tyres, claiming they last much longer than those of rivals. But Michelin and the other tyre makers must also be somewhat envious at the huge international public awareness Pirelli has gained by making tyre strategy a key component of F1 racing.”
It goes on: “The return to F1 has created an intriguing marketing paradox for the Italian tyremaker. If Pirelli manages to succeed in these parallel worlds of making fast-degrading tyres for F1 at the same time as reliable, long-lasting and ecologically friendly high-performance tyres for the premium road car market it essentially serves, then it is all credit to them. However, if this calculated gamble backfires, it risks making life harder for the world’s fifth-largest tyre group. Competitors, for sure, will gloat and are unlikely to pass up the opportunity to poke fun at the Italians.”
The article concludes: “Analysts also seem to agree that, rather than damaging the company’s commercial performance, Grand Prix racing has enhanced the company’s leadership in the premium and super premium car markets. Its profits and margins have continued to improve while its market share in these car segments has grown by 36 per cent in the first quarter over the same period last year. This would suggest that high-end consumers are still buying its tyres.”