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PIF, Pirelli Announce Joint Venture on Leading Tire Manufacturing Facility in Saudi Arabia

The Public Investment Fund (PIF)
The Public Investment Fund (PIF)
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PIF, Pirelli Announce Joint Venture on Leading Tire Manufacturing Facility in Saudi Arabia

The Public Investment Fund (PIF)
The Public Investment Fund (PIF)

The Public Investment Fund (PIF) and Pirelli Tyre S.P.A (Pirelli), a leading global tire manufacturer, announced on Thursday the signing of a joint venture (JV) agreement to build a tire manufacturing facility in Saudi Arabia.

PIF will hold a 75% stake in the new JV with Pirelli holding the remaining 25% and acting as a strategic technology partner to support the development of the project by providing technical and commercial assistance, according to a PIF press release.

The plant is expected to start production in 2026. The JV will manufacture high-quality tires for passenger vehicles, under the Pirelli brand, and will also manufacture and market tires under a new local brand targeting the domestic and regional market. The total investment in the JV is around $550 million. For Pirelli, the project will have a neutral impact on the company’s deleveraging targets to 2025.

The statement said that "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 localizes 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 tire maker to directly source production in Saudi Arabia.

Deputy Governor and Head of MENA Investments at PIF Yazeed A. Al-Humied, said through the Joint Venture, PIF is building production capabilities in the automotive and mobility value chain.

“This collaboration marks another pivotal milestone in our journey to diversify the economy, enhance sustainability and localize manufacturing capabilities in Saudi Arabia,” he said.

Executive Vice Chairman of Pirelli Marco Tronchetti Provera said that accessing local production in Saudi Arabia “represents a great opportunity for Pirelli.”

The closing of the transaction is subject to obtaining approvals from the relevant authorities and satisfying certain conditions under the agreement, the PIF statement said.

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Türkiye Inflation Higher than Expected, Teeing up Tough Rate Decision

People shop at a fresh market in Istanbul, Türkiye, July 5, 2024. (Reuters)
People shop at a fresh market in Istanbul, Türkiye, July 5, 2024. (Reuters)
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Türkiye Inflation Higher than Expected, Teeing up Tough Rate Decision

People shop at a fresh market in Istanbul, Türkiye, July 5, 2024. (Reuters)
People shop at a fresh market in Istanbul, Türkiye, July 5, 2024. (Reuters)

Turkish inflation was higher than expected at 47.09% annually and 2.24% on a monthly basis in November, official data showed on Tuesday, potentially reducing the prospect of an interest rate cut later this month.

Prices of food and non-alcoholic drinks jumped 5.1% from the previous month, the Turkish Statistical Institute data showed, underlining the central bank's continued struggle against years of high inflation. Health-related prices rose 2.69%.

In a Reuters poll, the consumer price index inflation rate was expected to slow to 46.6% on an annual basis, while the monthly figure was seen at 1.91%, mainly due to food and medicine prices.

Although above expectations, annual inflation in November was at its lowest level since mid-2023. In October, annual inflation was 48.58% with the monthly rate at 2.88%.

The central bank has hiked rates by 4,150 basis points since June last year as part of an abrupt shift to economic orthodoxy, and has kept its policy rate steady at 50% since March.

It is watching monthly inflation closely as it decides when to cut its main interest rate, with expectations having grown in recent weeks that easing could come as soon as December.

Delaying rate cuts until next year, after "critical decisions" on the minimum wage and other administered prices "would be more appropriate", said Haluk Burumcekci, founding partner at Burumcekci Consulting, of an expected Jan. 1 rise to minimum wage.

But he added the central bank's latest policy statement "suggests that rate cuts are a serious option" for December.

After its policy meeting last month, the bank said it would set its rate to ensure the tightness required by the projected disinflation path, setting the stage for a cautious easing cycle.

The bank had also predicted that food would elevate overall inflation in November. Turkish Vice President Cevdet Yilmaz said on Tuesday that while food inflation remained high, aside from that there was a broadly more positive trend.

The Turkish lira was little changed after the data at 34.7505 to the dollar, having earlier touched a record low.

Economists had flagged medicine prices as an inflation driver in November since the government late last month hiked by 23.5% the euro rate for imported medicines.

The domestic producer price index was up 0.66% month-on-month in November for an annual rise of 29.47%, according to the data.

The Reuters poll showed annual inflation falling to 44.8% by year-end, close to the central bank's target of 44%. It also showed inflation falling to 26.5% at end-2025, compared to the central bank's view of 21%.