Apollo Tyres is nearing the finish line of a major operational overhaul in its European theater. During the company’s Q1 FY27 earnings call, management confirmed that production at its Netherlands facility officially ceased in June 2026, marking a definitive shift in the manufacturer’s regional manufacturing strategy.
The restructuring is a central pillar of Apollo’s plan to optimize costs and defend margins against a volatile raw material environment. Management expects the full transition to be completed by October 2026, with the primary financial benefits slated to begin accruing in the second half of the fiscal year.
Strategic Production Migration
The relocation of manufacturing capacity is being handled through a multi-hub approach. Truck and Bus Radial (TBR) production is being shifted to India, while the majority of Passenger Car Radial (PCR) production is moving to the company’s Hungary plant. Smaller 14–15-inch PCR tyres are also being transferred to Indian facilities.
The Hungary plant expansion, increasing PCR tyre capacity from 17,000 to 21,000 tyres/day, is expected to commence in H2FY27.
Notably, the company has opted for an "off-take" model for its high-end Agri tyres rather than building new internal capacity. Management noted that setting up dedicated Agri tyre production in India was not economically viable given the relatively small scale of 10-20 metric tonnes per day.
Financial Impact and Margin Outlook
The restructuring costs have temporarily masked the underlying health of the European business. Apollo’s European EBITDA margin stood at 9% for Q1 FY27, but management highlighted that excluding temporary overlap costs from the restructuring, the margin would have reached approximately 11%.
As the company moves toward the October completion date, the focus shifts to the Hungary plant, where a capacity expansion from 17,000 to 21,000 tyres per day is expected to commence in H2 FY27. This increased throughput, combined with the lower cost base of the new production mix, is expected to drive a gradual margin recovery starting in the latter half of the year.