Apollo Tires plans to adopt a dual brand strategy with the recent launch of Vredestein in India. The company acquired this premium brand based in the Netherlands in 2009.
Satish Sharma, President for Asia-Pacific, Middle East and Africa, said Automotive professional that with its European DNA, Vredestein can compete with Michelin, Bridgestone, Continental and Pirelli in the Indian car and motorcycle space.
According to him, Vredestein will be best suited for luxury models such as the Mercedes S-Class up to the Toyota Corolla. The allure of Apollo, on the other hand, can climb from the WagonR to the Toyota Camry. “So this is a complementary offering where the Vredestein brand comes into play when the appeal for Apollo starts to wane,” Sharma said.
Imported tires are struggling to adapt to India’s rugged terrain and barely travel 35,000 kilometers. Realizing this, Apollo’s R&D teams have made every effort to extend Vredestein’s life by almost 20%. Local brand content is currently around 70% and efforts are underway to improve it further with the help of key vendors.
Reliance Industries, for example, has already started producing certain grades of synthetic rubbers while Bekaert is releasing steel wires. Other suppliers are working on fabrics as part of the desire to source more locally. “With the right providers in place, localization will definitely improve,” Sharma said.
Meanwhile, Apollo is also betting big on its fifth installation in India and its seventh worldwide. Located near Chittoor in Andhra Pradesh, this 256-acre unit will see an investment of Rs 4,000 crore in phase 1. By 2022, this plant will produce more than 15,000 car tires and 3,000 radial tires for trucks / buses per day.
The company is also optimistic about its radial tire plant located at its Limda plant in Vadodara, Gujarat. Targeting the two-wheeler segment, initial capacity will be 30,000 motorcycle radial tires and 60,000 cross-ply tires each month.
Foreign markets are also important to Apollo, and export revenues have grown from 9% of revenue in FY21 to 15% in the first half of this fiscal year. There are, however, challenges in the form of high commodity prices that cause demand to shift towards more affordable options. Some fleet owners, for example, prefer bias tires to more expensive radial tires because of the “huge push in costs.”
When it comes to raw materials, two separate themes have been playing out since Covid-19 first erupted in India. The first wave of last year saw bottlenecks and a contraction in demand accompanied by falling costs. The second wave concerned the recovery in vehicle volumes and the dynamism of the replacement market leading to higher prices.
This was confirmed by the raw material cost index which jumped about 35 percent in one year and manufacturers like Apollo passed the burden of the costs on to consumers. In the process, fleet operators have struggled to purchase vehicles, although Sharma said it could be a temporary phase.
All of this is happening at a time when trucks are slowly getting back on track but other headwinds are also occurring in the form of container shortages, port congestion, high fuel prices, overloading. semiconductor crisis and the great unknown of the third wave of the pandemic. The next few months will give a clearer picture although the industry is hoping for the best.
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Apollo Tires aims for a premium space with Vredestein
Apollo Tires believes that with its European DNA, Vredestein can compete with Michelin, Bridgestone, Continental and Pirelli in the Indian car and motorcycle space.