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Apollo Readies for Massive Growth in Europe

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After launching its passenger car radial brands in key markets in Europe in June this year, Apollo Tyres is now gearing up to grab a bigger piece of European market share.

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The Netherlands-based Apollo Vredestein BV is planning to have UHP Vredstein tires manufactured at the Vadodara, India, plant for supplying to Europe from the first quarter of 2011-12. According to Apollo Chairman, Onkar S. Kanwar, the company currently is exporting 50,000 Amazer, Acelere, Aspire and Hawkz radials a month from Vadodara primarily to cater to markets in Germany, the U.K., Italy and Holland.

The Hindu Business Line recently reported the exports are expected to increase nearly 30% to 65,000 a month by March-April 2011.

Apollo is still considering its options for production in Eastern Europe, according to Tyres & Accessories, which reported Kanwar has said the company is “evaluating takeover possibilities” within the region.

The tiremaker may invest up to Rs 20 billion (£280 million) buying and setting up facilities outside of India; an Asian acquisition is also being evaluated. A further Rs 10 billion is said to have been earmarked for expanding capacity within India, T&A reported.

Considering the size (200-300 million units annually) of the European tire market, Apollo has a small presence so far. The big push, therefore, is planned for the next fiscal year, provided the Chennai, India, plant starts operating at full stream and takes care of the domestic market, which is witnessing a 30% demand surge. This would, in turn, help the company to use most of its 18,000-tires-a-day capacity at Vadodara for exports to Europe. A portion of the demand for Apollo brands in Europe will also be catered to by the completion of the ongoing capacity expansion of the company’s Netherlands plant sometime next year.

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“There is encouraging customer feedback for our (Apollo) tires in Europe. We will give a big push to our marketing initiative once supply constraints are stabilized,” Kanwar told Hindu Business Line, adding that the company has already opened 17 offices in the Continent and appointed the French advertising and communications multinational, Publicis Groupe, to work out the campaign strategy. The campaign is expected to be rolled out at the end of the winter.

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