Apollo Opens Tire Plant in Hungary, Looks for Growth in the U.S.
The opening of Apollo Tyres Ltd.’s new $500 million consumer and commercial tire plant outside of Budapest, Hungary, last month was a huge global event. Said to be the largest investment by an Indian-based company in Hungary, the grand opening drew a visit from Hungary’s Prime Minister Viktor Orban.
There were 1,400 people at the opening, plus 16,000 employees of Apollo watching worldwide. Modern Tire Dealer was among the various media also represented at the event.
This is Apollo’s first greenfield plant outside of India, and a further indication of Apollo’s commitment to growing its presence in Europe. During its 2015-2016 financial year, Apollo reported annual worldwide sales of $1.8 billion.
“With this inauguration today of our Hungary greenfield facility, we have crossed another milestone in our global growth journey,” said Onkar Kanwar, Apollo Tyres Ltd. chairman. “This facility will help us further increase our presence and market share in Europe.
“From being a replacement market-focused company in Europe, we will soon be starting supplies of our tires to all the leading OEs in Europe.”
Neeraj Kanwar, vice chairman and managing director of Apollo, made it clear during a press conference that the new factory will be an OE plant and that the company wants the plant’s production to eventually be 25% OE tires versus replacement tires. He further added that the company expects to be selling to premium car makers with its Vredestein brand.The facility is the company’s second plant in Europe. It is in addition to Apollo’s existing plant in the Netherlands, and will produce both Apollo and Vredestein tires. The highly automated plant features IT-driven systems and robotics. The final capacity of the plant at the end of Phase I will be 5.5 million passenger and light truck tires and 675,000 truck tires. About 500 people will work at the facility when fully operational.
It took two years and 7,000 workers to construct the plant, which is located on 178 acres. The facility itself takes up 37 acres, with a “green area” accounting for 42 acres.
The inauguration also marks Apollo’s 40th anniversary for the manufacturing and selling of tires. Apollo originally produced bias truck tires, and slowly ventured into consumer tire production, then radial truck and bus tire manufacturing.Apollo also has four tire plants in India. Its largest plant is near Chennai, in the southern India state of Tamil Nadu. Two other plants are located in the southern India rubber-producing state of Kerala, and the fourth is in Limda, Gujarat. These four have a combined production capacity of 1,450 tons a day.
The Enschede plant in the Netherlands adds another 195 tons a day, taking current capacity to around 1,650 metric tons a day. Last year, the company signed a Memorandum of Understanding to set up a state-of-the-art tire manufacturing facility on the southeastern coast of India.
Neeraj Kanwar said during the grand opening ceremonies that the company can produce 25 million tires worldwide per year.
Three other global tire manufacturers have tire plants in Hungary: Hankook Tire Co. Ltd., Bridgestone Corp. and Groupe Michelin. ■
Apollo turns its focus on the U.S. market
Now that its plant in Hungary has begun production, Neeraj Kanwar, vice chairman and managing director for Apollo Tyres Ltd., said the company is turning its focus to the U.S. market.
“Our long-term plans include entering the U.S. market,” he said. In order to do that, the company must have the right products and the right distribution network set up.
He pointed to the hiring of Steven Smidlein as senior vice president for Apollo Vredestein Tyres North America Inc. slightly more than a year ago as one of the steps the company has taken toward that end. “The emphasis is on building the market and our brand,” said Kanwar.Right now, Kanwar said the company has 5% of the products that the U.S. market needs and he wants to increase that number to 70% in two years. Kanwar wants to establish a small R&D center in the U.S. that will coordinate its work with the company’s European center in the Netherlands. This would give the company four total R&D centers worldwide.
Kanwar acknowledged that he got his “hands burnt” in his company’s ill-fated purchase of Cooper Tire in 2013 as a way of entering the U.S. market. Although he doesn’t rule out a non-organic approach, he said that there is nothing on the table at this point.
The company wants to have 10% of its total sales coming from the U.S. and Canada in five years, said Kanwar. He also stated that the company could look to build a plant in four to five years in the U.S.
Currently, the company has been selling passenger, light truck and farm tires in the U.S. under its Vredestein brand along with a mixture of OHT (off-highway-tires) under both the Vredestein and Apollo brands. The Apollo brands are primarily industrial tires, according to the company. To date, the company has not sold truck tires in the U.S.
Moving forward, Smidlein says the company will be emphasizing its Vredestein brand for passenger tires in the U.S. and Canada, but is undecided at this point regarding which brand its light truck tires will carry. He also told MTD that since Apollo has the highest market share for truck tires in India, the company will probably be looking at using the Apollo label for its truck tire line when those tires are brought into the country.
Apollo currently has 10 employees in the U.S., with five of those positions in the field.