Tuesday, July 2, 2013

Pirelli image takes a beating after Silverstone tyre problems

(Reuters) “Take the F1 performance to your car,” runs a slogan on the website of Italian tyre maker Pirelli that risks alarming motorists after a weekend of high-speed blowouts during the British Grand Prix at Silverstone.

Pirelli, which supplies all 11 teams in F1 motor racing, suffered the downside of supporting high profile sport on Monday after images of its shredded tyres were beamed to millions of TV viewers around the world.

“Terror tyres” was the headline on the back page of Britain’s Daily Mail, while The Times said “Road to hell as tyre chaos almost halts grand prix.”

The case has echoes of the PR meltdown suffered by Britain’s G4S last year when it failed to supply enough security guards for the London Olympics, forcing organisers to draft in soldiers and exposing the company to ridicule.

Pirelli’s motor sports specialists were urgently trying to discover what caused the five tyre failures during the British grand prix at Silverstone, whether it was something to do with their product or whether the track was to blame.

The sport’s millionaire drivers raised the spectre of boycotting next weekend’s German grand prix if changes were not made, fearing for their safety. Brazilian Ayrton Senna in 1994 was the last driver to be killed in a race.

F1′s complex rules, internal politics and team rivalries have all complicated Pirelli’s efforts to produce a good racing tyre this season but those subtleties were lost on most viewers.

“A lot of these things are beyond their control,” said Joel Seymour-Hyde of sports marketing agency Octagon.

“The bottom line is your product is a tyre. It goes around on a fast car and it failed spectacularly,” he added.

The British race was the eighth stop of 19 on the F1 calendar this season and the first time that tyre blowouts have been a major problem.

The Pirelli tyres had been the centre of controversy all season, with drivers complaining they had to cut their speed to prevent them wearing out after only a few laps.

One possible solution to the crisis would be to revert back to last year’s tyres, leading team Red Bull suggested.

Shares in Pirelli edged lower on Monday when news also broke that Italian prosecutors were seeking to jail company chairman Marco Tronchetti Provera for two years in a case related to his time as head of Telecom Italia.

Pirelli, the world’s fifth biggest tyre maker, has been the sole supplier to Formula One since 2011 under a contract that expires at the end of this season.

The 11 teams make a cash payment to Pirelli for the tyres and also carry branding for the company. The teams complain that the value of the advertising they supply far outweighs the cost of the tyres.

Sponsors and suppliers use major sporting series and events like the Olympics to show their ability to deliver under the most exacting circumstances.

“F1 is Pirelli’s attempt to shout louder than anyone else, to get noticed,” said Simon Chadwick, professor of sports marketing at Coventry University in central England.

Chadwick said that few viewers would have decided never to buy a Pirelli tyre on the basis of Sunday’s blowouts. However, the risk was that the brand would develop negative associations – the exact opposite of what sponsors are trying to achieve.

“You normally associate F1 tyres with safety and security. It’s about reliability,” he said. “Its brand to a greater or lesser extent will have been affected.”

Pirelli must now decide whether to remain in the sport and repair its image or cut its losses and quit. It has already committed to contracts for trackside advertising for next season so a withdrawal would be a surprise.

The company declined to comment on Monday. Paul Hembery, its motorsport director, said on Sunday that the company was urgently analysing the failures.

One by-product of Sunday’s chaotic race, won by German Nico Rosberg in a Mercedes, was that it put the sport back in the news on a weekend when it was competing with Wimbledon tennis and the British and Irish Lions rugby tour to Australia. (Reuters)

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