Pirelli to pump $200m into Chinese plant

Pirelli's tires are traditionally considered high performance products, normally finding their way onto the wheels of some of the world's most desirable marques such as Aston Martin, Bentley, Ferrari, Lamborghini, Maserati and Porsche.

It currently holds a 20 percent global share of the premium tire sector, putting it in pole position to benefit from China's booming demand for luxury vehicles and SUVs.

"China's vehicle market is the most promising, especially for luxury vehicles. Its luxury car industry is expanding rapidly and has become the most important market for high-end auto brands," said Borgo.

Statistics show that although China's passenger vehicle sales growth slowed to 7.1 percent in 2012, luxury car sales surged more than 20 percent. The SUV sector remained the highest single growth area, experiencing a 25.5 percent rise on 2011.

"China's automobile market has grown tremendously, especially in the luxury car segment. This market will continue to increase, as will the premium tires market," said Borgo.

He said that his confidence in the market also comes from the fact that more luxury cars are being made locally.

China's Chery Automobile Co Ltd sealed a 17.5 billion yuan ($2.8 billion) joint venture project with British luxury carmaker Jaguar Land Rover in November, with plans to make 250,000 passenger vehicles under Jaguar, Land Rover and Chery brands, starting from July 2014 in Jiangsu province.

Italian manufacturer Fiat SpA and its Chrysler Group LLC subsidiary also signed an agreement with Guangzhou Automobile Group Co in January to produce its Jeep SUVs in China.

The world's largest automobile market since 2009, China is also considered its largest tire market.

Statistics show that its total tire production in 2012 is expected to reach 483 million units, a growth of between 5 and 7 percent on 2011, accounting for almost a third of global output.

Xiang Hanxue, a tire industry analyst with research firm Forward Business and Intelligence Co, predicted China will reinforce its leadership in the sector by yielding more than 550 million units of tires by 2015.