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Now on the Old Continent with the acquisition of Vredestein, Apollo Tyres is ready to challenge the big brands in its territory; the Geneva Motor Show provided the occasion for meeting all the management of the Indian group and for unveiling plans within the framework of an expansion strategy that is now picking up speed

Mino De Rigo

A BEACHHEAD and the driving force of a recognized image on the Continent for acquiring an indispensible European identity that was quickly corroborated by the opening of a new factory in Slovakia. A positioning in the middle of the product pyramid to avoid being confused with competition from Asia. A soft-sell approach that primarily targets original equipment agreements by taking the road of the same price everywhere for changeover tyres. This is a brief outline of the European strategy of Apollo Tyres, which has owned the Dutch brand, Vredestein, for three years and has announced that it is now ready to step on the gas. And what better occasion to do so than the Geneva Motor Show, which was attended by the entire management.
Chairman Onkar Singh Kanwar was clear: “If other manufacturers are looking at the Far East, then we are oriented towards the European market and, despite the difficult moment, continue to invest in the growth of the factory at Enschede, in technologies and new tyres as we are well aware that the best products are launched here”. “A part of this context” - said his son, Neeraj Kanwar, group vice chairman – “is the decision to open a new production site in East Europe, which will employ 900 people and require an investment of € 200 million over the next five years. Furthermore, we are ready with the new EU label and Community regulations are an important guide for the standardization of our factories.”

Focus on original equipment
The initiative is primarily a function of the original equipment business for which the vicinity of car manufacturers appears to be a determining factor. And OE contracts are the key that Apollo has chosen for increasing market penetration. Rob Oudshoorn, former MD at Vredestein and still head of the Apollo Tyres business on the Old Continent, explained: “In India the agreements are with Volkswagen, BMW and Mercedes for locally-made vehicles. Now they will be extended to Europe with the aim of making Apollo our main brand”. To do this, it will use research, development and engineering synergies that have just produced the Aspire 4G, the first Apollo UHP tyre for the European market and Indo-Dutch to all effects and purposes. “We worked on structure and design” – Oudshoorn pointed out – “and they worked on the compounds. It’s a collaboration that works. We are counting on the two brands selling the same quantities of tyres in Europe by 2016”. At the moment, the forecast for this year is 6 million tyres for Vredestein, a brand that will continue to focus only on the changeover market, thanks to the 20% increase in production capacity at the Enschede site, whereas sales of Apollo should be about a million. In fact, it is gradually advancing into outlet countries, the first of which, the day after the acquisition, were Holland, Great Britain, Germany and Italy; now the commercial and distribution business can be extended to Switzerland, Austria and Denmark, with future expansion throughout Europe. “The strategies” – the Dutch manager repeated – “are totally different to those for Vredestein, whose role is specialized producer in the premium segment. And the brands will also remains separate”.

Positioning in the standard range
For us, OE” – observed research and development manager Peter Becker – “is a constant challenge. Also from the point of environmental requirements. So we are adopting production infrastructures and processes that are more eco-compatible and we use more ‘green’ materials in our products. They are requested without exception by car manufacturers (partnerships with Apollo range from Fiat, Škoda and Ford to Volkswagen and Mercedes, from Hyundai and GM to Tata and Mahindra)” that also want to protect their brand image. “At present” –  Oudshoorn added – “we are doing multiple tests with various automotive manufacturers.
We have spent a lot on introducing the brand to the European market, even with the impetus of Vredestein, and I believe we will be successful also because changeover tyres will cost the same everywhere. The range includes the Hawkz family (A/T, R/Ts, H/L and Winter) for all-terrain AWDs, light goods vehicles and SUVs, as well as the Amazer 3G Maxx line for city cars and compacts (from 13” to 15”) that was successfully tested recently by the German institute ADAC, Austrian homologation and the Swiss Touring Club.

Core objectives
Already on the home stretch is the new Apollo all-season tyre based on feedback about the Vredestein Quatrac 3 (and about Lite, the energy-saving version). However, the Maloya brand is leaving the scene definitively because of the decision  to avoid product cannibalization. About a quarter of Apollo’s revenues now come from the original equipment market, which in financial year 2011 was close to $ 2 billion. It was the high point of a 20% yearly growth rate over five years that has taken the Indian group to 16th place among the world’s tyre producers and the objective now is to be among the top ten by 2016. Set up in 1976, Apollo Tyres has nine factories, four of which are in India and four in South Africa and Zimbabwe (one of these makes retreads). Its turnover, 38% of which is fed by exports to over 70 countries in Asia, Africa and Europe, comes from the car segment (35%), light goods vehicles (8%), agricultural and quarry-construction vehicles (11%), but the main share of 46% comes from trucks and buses. As to commercial expansion in new areas, “first we will consolidate our business in southeast Asia” – stated Apollo Tyres  vice chairman – “then we will expand our range of action to the Middle East and Latin America. We will not produce in China or in the Russian market, which is overrated from an objective viewpoint”.


• Indo-dutch is the norm at Vredestein safety centres
Last year the Italian market absorbed about 70,000 Apollo tyres, at the end of 2012 this figure should be at least tripled. The words of Giovanni Masinelli, MD of Vredestein Italia, who gives the almost 300 dealers in the Safety Centres  “soft-franchising” network the task of achieving this goal: “At the beginning of last year” –  he said – “we had a few problems with supplies. Now that tyre availability is assured with the start up of new lines at the Chennai factory (the most recent and modern of Apollo Tyres’ sites in India), we can start to push the products” in the car segments and very soon also for trucks. While awaiting the impetus that will follow the original equipment agreements that are still ongoing with Fiat and Volkswagen, the idea is to extend supplies to include other networks.
The choice is different: even if it takes another year, the important thing is to enter the market with the correct product positioning”.

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