Apollo Tyres is gearing up for an aggressive expansion in the US market, aiming to grow sales from $120-130 million to $500 million in the coming years, according to Vice Chairman and Managing Director Neeraj Kanwar.
Speaking with Moneycontrol about the company's strategic focus, Kanwar highlighted, “The next growth chapter for Apollo is really the US market. We’ve just begun our story in the US, and the consumer response to our brands has been very good.”
Apollo Tyres currently supplies tyres to the US from its Indian plants and a facility in Hungary, focusing on building sales and distribution networks while strengthening its brand presence.
“We sell the Vredestein brand in car tyres and Apollo truck tyres in the US, and there’s strong consumer uptake,” Kanwar added. Despite global uncertainties, Kanwar remains optimistic, stating, “Our vision is to take US sales to $500 million, and there’s a lot of focus on achieving that.”
Kanwar dismissed any plans to scale back in Europe, a key market where Apollo claims to have outpaced growth. “Europe is our domestic market. We’ve grown 5-6% there, compared to the market’s 1-2% growth,” he said, emphasising continued investments in R&D, branding, and market strategies.
India market performance
Despite sluggish demand in India’s auto sector, Apollo Tyres has seen consistent growth.
“Commercial vehicles and passenger cars are down, but we’ve had double-digit growth in commercial vehicle and farm tyres, and high single-digit growth in passenger car tyres,” Kanwar shared. The company attributes this success to its rich product mix, deeper rural distribution, and new product offerings.
Kanwar highlighted Apollo’s strategic shift toward profitability and productivity, leveraging AI and machine learning to enhance efficiency. “Our focus is on Return on Sales and Investments (ROSI). We’ve improved from sub-10% two years ago to above 15% today. The goal is to sweat assets, improve product mix, and exit less profitable segments,” he explained.
Commodity challenges
Discussing the all-time high rubber prices due to supply-demand mismatches and adverse weather in producing nations, Kanwar noted, “Rubber prices have started coming down, but there’s still a supply issue. To tackle this, the tyre industry is investing Rs 1,200 crore in the Northeast of India, aiming to grow 200,000 hectares of natural rubber.”
Apollo is also exploring substitutes like guayule, a shrub-based rubber alternative, to manage costs and ensure sustainability.
EV opportunities and budget wishlist
While EV adoption is still nascent in India, Kanwar expressed readiness with specialised tyres. “EV tyres require low rolling resistance and less noise, and we already have products for that,” he said, noting that they are closely monitoring the market.
On budget expectations, Kanwar urged the government to increase infrastructure and road construction spending while advocating for a GST rate cut from 28% to 18%. “The states need to come together to infuse more funds into infrastructure, which will spur investment and growth,” he concluded.
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