Pirelli adopts a multi-distributor strategy

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Tor Siam Commercial, distributor of Yokohama tyres, says it has been appointed distributor for Pirelli, raising concern that original distributor Italsiam Motors has been rejected.

But according to Italsiam, the company remains a Pirelli distributor.

Italsiam managing director Chayaphorn Phornprapha said the Italian tyre-maker had adopted a “multi-distributorship” strategy for Thailand and appointed Tor Siam as a second distributor.

Chayaphorn said Pirelli’s move followed similar moves in Malaysia, Indonesia and Taiwan.

“Pirelli is planning to open up a new plant in China to produce low-cost tyres as well as off-road tyres, which will flood the Asian market.

“So the multi-distributorship strategy will increase the number of tyres sold in this region,” he said.

Chayaporn said Italsiam had been a Pirelli distributor for eight years and annual contract extensions had been signed every year. “This year we signed the contract with Pirelli in January.”

Italsiam sells an average of 5,000 Pirelli tyres a month.

He said Pirelli had informed it of the decision to appoint a second distributor.

“The competition between distributors, as well as the instant expansion in the number of dealers, will raise total sales in Thailand,” he said.

But Chayaphorn said that with more than one distributor there could be problems.

“This will cause some problems in marketing, as well as advertising, since products are not divided between the companies,” he said.

“Price-cutting will also hurt the image in the premium segment, and those who will benefit from it now are dealers who order from the distributor that offers the lower prices,” he said.

“But we do have our own dealers who are very close to us, and we believe that this will not affect our business too much.”

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