Apollo Tyres OE on Volkswagen?

Apollo Tyres is in talks with Volkswagen about supplying tyres to the small car the German carmaker is planning to introduce in the next two years. India’s Business Standard newspaper quoted Onkar Kanwar, chairman and MD of Apollo Tyres as saying: “We are holding talks for supply of car radials for Volkswagen vehicles, which are expected to roll out in the second half of 2009-10.” It is not clear if the deal will cover Europe or just India. According to reports Volkswagen recently firmed up its plans to set up a car plant in Chakan near Pune and is expected to sign a memorandum of understanding (MoU) with the Maharashtra government by next week.

Apollo currently sells 30 per cent of its production into the original equipment market. Despite the fact that OE margins are well-known for being considerably slimmer than aftermarket sales, Kanwar said Apollo is aiming to increase OE sales to 35 per cent of production.

At the moment 85 per cent of Apollo’s revenue is derived from domestic sales, however the company is aiming increase export sales in the coming years.