India’s Apollo Tyres, which has widespread operations spanning five manufacturing facilities in India and two overseas in Hungary and Netherlands, has revealed that it is set to commence local manufacturing of the ‘Vredestein’ brand of tyres in the country.
In 2009, Apollo had acquired Netherlands-based Vredestein, which is one of the oldest tyre manufacturing companies in the world and has a range of premium and performance car radials, aimed at the luxury end of the market.
Switch to local manufacturing
While Apollo Tyres had introduced the Vredestein range in India in 2013, albeit the tyres were only brought in as full imports. Now, given that the government of India’s Ministry of Commerce and Industry has put tyres into a ‘restricted’ category for imports, from earlier being under an open general license (OGL) bracket, the tyre maker has had a shift in its strategy.
Speaking to Autocar India and Autocar Professional, Neeraj Kanwar, vice-chairman and MD, Apollo Tyres, revealed, “We are working towards locally manufacturing Vredestein-branded tyres in India so that we are able to offer Apollo as well as made-in-India Vredestein tyres for the higher segment, primarily targeting customers of Mercedes-Benz, Audi and BMW.”
“In fact, this strategy is linked to the import restrictions on tyres. Imports have been happening in the higher segment of the market which is the 16-inches-and-above category and with the restrictions coming in, it opens up that market for us,” Kanwar added.
Investments in capacity and capability
The company, over the years, has been consistently investing into technology and brand-building in the Indian market, and is now looking set to bear the fruit of its efforts.
According to Kanwar, “Today, all our plants in India are multi-products and are selling to all markets. They can manufacture both Apollo as well as Vredestein brands.”
Apollo Tyres recently commenced operations at its 256-acre greenfield facility in Andhra Pradesh’s Chittoor district where it has committed a total investment of Rs 3,800 crore in the first phase. The new plant will produce PV radials and truck-and-bus radials (TBRs).
It also has two R&D centres in Chennai and Netherlands and its cross-functional teams are mutually undertaking projects on low rolling resistance radials (LRRRs) and improved TBRs.
“We welcome this policy (restricting tyre imports) with open arms as it opens up a huge opportunity for Indian manufacturers. Apollo has been increasing its investments in R&D. Today, we have over 350 engineers and scientists between India and Europe.”
“Five years ago, our cost-to-sale in R&D was 1 percent which has grown to 3 percent today. So, this restriction also help India go up the R&D ladder. The policy is giving a good horizon and great opportunity for India and for make-in-India products,” he added.
The company is also investing into automation, IoT, data probing and machine learning at its plants. As per the vice-chairman, Apollo is currently conducting pilots in Hungary and will gradually deploy the learnings to improve quality, efficiency and machine maintenance at its sites in India.
Made-in-India for the world
Given that the luxury-car market is a niche segment and caters to limited volumes which stood at 40,340 units in FY2018, Apollo might also export these made-in-India Vredestein tyres to other markets to get benefited from economies of scale.
“We can produce in India and can export to other markets in Asia such as Thailand, and to Dubai and all of South Africa as well. We will start exporting to these high-end markets and on top of Vredestein, we will also introduce high-end Apollo-branded tyres in these markets,” said Kanwar.
“We will be launching the Vredestein-branded tyres in India within the next three months,” he confirmed.
The Vredestein range of car radials will be available in India in sizes in the R16 to R20-inch diameter range. The company is also aggressively marketing its Apollo-branded high-end radials through various schemes being offered by its retail partners.
Exclusive interview with Neeraj Kanwar, vice-chairman and MD, Apollo Tyres in Autocar Professional's August 1-2020 issue. Download your copy now