Apollo Tyres To Cease Production At Enschede Plant Amid Rising Costs And Market Shifts

Apollo Tyres Ltd., a Gurugram-based leading tyre manufacturer, announced plans to discontinue tyre production and related activities at its Enschede facility in the Netherlands by the summer of 2026. The decision, disclosed in a regulatory filing on Friday, is attributed to escalating manufacturing costs driven by macroeconomic disruptions, significant increases in energy and labour expenses, and declining demand for specific tyre segments, including Spacemaster and agricultural tyres.  

 In a statement, the company noted, "These factors, with pricing pressures from low-cost competitors, render manufacturing at Apollo Tyres Netherlands BV (ATNL) uncompetitive." The company further emphasized that the high-cost environment is expected to persist, making long-term profitable production at the Enschede site unfeasible.  

Apollo Tyres NL BV, based in Enschede, specializes in the production of pneumatic tyres for cars and agricultural vehicles and operates as a subsidiary of India-headquartered Apollo Tyres Ltd.  

As of March 31, 2024, Apollo Tyres Netherlands reported a revenue of Rs 1,463.6 crore, contributing approximately 5.8% to the total consolidated revenue of its parent company, Apollo Tyres. In terms of financial strength, the Dutch subsidiary held a net worth of Rs 1,166.7 crore, accounting for roughly 8.4% of Apollo Tyres' overall consolidated net worth during the same period.

Benoit Rivallant, President of ATNL, acknowledged the difficulty of the decision, stating, "Submitting the Request for Advice to the Works Council on the intended decision to discontinue production has been enormously challenging."

He highlighted that despite implementing several cost-reduction initiatives in recent years, the benefits were offset by ongoing inflationary pressures. "After thorough investigation, we saw no other option than to recommend the discontinuation of the production activities at Enschede," Rivallant added.

The company has communicated the decision to all staff during a town hall meeting and emphasized its commitment to fulfilling obligations toward employees and the Works Council. Apollo Tyres also plans to maintain communication with customers, suppliers, and other stakeholders to ensure continuity in business operations. The execution of the intended decision is subject to the completion of the Works Council consultation process and supervisory board approval.