Stock - Saudi PIF
Saudi Arabia is set to become a global automotive manufacturing hub by 2030 Image Credit: Supplied

Riyadh: Saudi Arabia’s Public Investment Fund (PIF) has entered into a joint venture agreement with leading tire manufacturer Pirelli SPA to build a tire 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. The total investment in the JV is around $550 million, and the plant is expected to start production in 2026.

Officials announced that Pirelli will offer technical support and expertise to design, develop and operate the plant on Thursday. The plant is expected to generate an annual production capacity of 3.5 million units. The JV will also be an important anchor to attract further investment in Saudi Arabia.

The JV will manufacture tires for passenger vehicles under the Pirelli brand and manufacture and market tires under a new local brand targeting the domestic and regional markets.

Yazeed A. Al-Humied, Deputy Governor and Head of MENA Investments at PIF, said, “Through this Joint Venture with Pirelli, PIF is building production capabilities in the automotive and mobility value chain and enhancing opportunities for private sector contribution. This collaboration marks another pivotal milestone in our journey to diversify the economy, enhance sustainability and localize manufacturing capabilities in Saudi Arabia”.

Saudi Arabia is set to become a global automotive manufacturing hub by 2030, said Al-Humied. Among its significant investments in the sector, PIF and Hyundai Motor Company recently announced a landmark $500 million JV to establish an automotive manufacturing plant in Saudi Arabia.

Marco Tronchetti Provera, Executive Vice Chairman of Pirelli, 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.”

In line with its local-for-local strategy, Pirelli, through the JV, will become the first tier 1 tire maker to source production in Saudi Arabia directly.