Apollo Planning European Factory & Distribution Chain

Apollo Tyres’ plans to double its turnover to US$2 billion by 2010 involve expansion in Europe, and Neeraj Kanwar, the company’s joint managing director and COO, has revealed further details of Apollo’s intentions to this end. Comments made by the senior Apollo executive have been printed in the Indian business newspaper, Mint.

The tyremaker is aware of Europe’s value as a market, and is planning its entry into the market carefully. Neeraj Kanwar said that Apollo views Europe “eventually as a domestic market.” Therefore, the company’s involvement in the region is “taking time because we want to get the service infrastructure and the back-end (operations) ready.” A previous attempt at European distribution, in cooperation with Netherlands based wholesaler Euro-Tyre BV, saw only a limited quantity of Apollo Tyres products sold in Europe, and this working relationship has now ended.

Kanwar added that he wants to position Apollo as a premium brand in Europe with its own distribution chain. The company will establish a unit called Apollo Tyres AG, which will be headquartered either in Germany or Switzerland, and will start operations in 2008. Initially Apollo’s presence in Europe will be made with tyres exported from a new Indian facility, currently under construction in the state of Tamil Nadu. Production within Europe would commence later. “We are looking at project feasibility in the Eastern Europe region in terms of cost of manufacturing and approach to market,” said Kanwar. He added that any facility established on the basis of this study – which is scheduled to be complete by the first quarter of next year – would initially focus upon the manufacture of passenger car tyres.

Today exports account for half of Apollo’s sales, a figure the company wishes to increase to 70 per cent by 2012. The tyremaker plans to divide the world market into three zones: India and Southeast Asia, which will be serviced by Apollo’s Indian factories; Africa and South America, supplied by the Dunlop Tyres International factories in South Africa; and Europe and the rest of the Asia-Pacific region. At present the company’s presence in Europe is marginal, with Regal brand car and truck tyres, produced by its Dunlop Tyres International unit, sold through Inter-Sprint.