Pirelli H1 China sales rise, investment on hold

Italian tyre maker Pirelli & C (PECI.MI) said on Thursday its sales in China rose 40 percent in the first half from a year earlier, but weak global demand has put a planned $100 million investment in the country on hold.

Aftermarket sales had grown thanks to a surge in China's auto market, but more visibility at the global level was needed before Pirelli embarked on its investment expansion, Giuseppe Cattaneo, the firm's general manager in China, said.

Pirelli said in July 2008 that it intended to invest $100 million over the next two years in China, doubling its production capacity by 2011.

"In July 2008, we were living in a different world," Cattaneo told reporters after a company event. "At this moment, we want to have a look at what's going on."

Despite bullish sales in China, demand in the United States and Europe had dropped sharply, Cattaneo said. He hoped a clearer picture would appear by the end of this year.

"Once the situation becomes better, or let me say more clear, we'll be able to confirm this investment," he said.

Pirelli produces tyres for both trucks and passenger vehicles in China. Nearly all the truck tyres are sold locally, but some car tyres are exported as the Chinese market is still relatively small, Cattaneo said.

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