‘We are planning to be the fifth largest tyre player by the end of 2025’: Harinder Singh
Tyre maker Yokohama India is entering into what it refers to as phase IV of its business plan this year. Harinder Singh, MD and CEO of the company explains what it means.
Most of India’s passenger car OEMs are expected to post strong performance results and going by the double-digit boom registered by some players. Naturally, it’s encouraging news for tyre makers, especially those who are watching the developing market trends. At the current rate, the country’s tyre industry has strong potential to more than double its revenue to US$22 billion by fiscal 2032 from US$9 billion in fiscal 2022, according to a report by the Automotive Tyre Manufacturers’ Association (ATMA), based on a comprehensive study by CRISIL Market Intelligence & Analytics (MI&A) Consulting. Yokohama India has big plans and is moving forward step by step.
2023 is an important year for Yokohama India as it is also the final year of the YX 2023 mid-term business plan. Harinder Singh, MD and CEO of Yokohama India shares details with Autocar Professional on how the company is moving forward with its business plans.
Yokohama India is in the final year of the YX 2023 mid-term business plan. How has the company progressed since inception and what are the plans moving forward?
Yokohama India commenced its operations in 2007 as a wholly-owned subsidiary of Yokohama Japan, initially importing tyres for the Indian market. In 2014, we achieved a significant milestone by establishing the first manufacturing unit in Bahadurgarh, Haryana. This plant was built with an investment of Rs 300 crore, and had an initial production capacity close to 700,000 units. Within two years, the plant surpassed the one millionth tyre production mark.
What happened post the Covid-19 period?
As automotive markets gradually reopened in 2020 after Covid, Yokohama India entered the second phase of production ramp-up. Our plant's capacity was increased to 1.6 million units per annum and in February 2023, we set up Phase III with the objective to take production to 2.5 million tyres per annum.
What are the immediate priorities?
I would say, increased production capacity and market expansion in India. Yokohama India aims to achieve a production capacity of three million units by the end of 2023. Looking ahead, we have ambitious plans for further expansion and by 2025, we are targeting to reach an annual production capacity of 4.5 million units.
This will be done through strategic investments, continuous improvement, and a focus on meeting customer needs.
What has been the Y-o-Y growth?
In the last two years in a row, we have grown at a CAGR of 43 percent which is the highest in the industry.
For the next mid-term (2024-2027) – is there a new business plan for India operations as the passenger car market continues to grow?
India’s tyre market is expected to grow at a CAGR of 8 percent from 2023 to 2027. With an additional investment of US$82 million earmarked for Phase IV expansion at our Yokohama Off-Highway Tires Vizag plant (a different assembly line for PCR), we aim to increase annual passenger car tyre production capacity in India from the current 2.8 million to 4.5 million units. The rapid growth of infrastructure, particularly the highway network promoted by the Government of India, will have significant implications for the automotive industry and the demand for tyres by OEMs and aftermarket.
With a plan to touch 4.5 million units annually, how will you address the future needs with the existing set-up?
It will come from the combination of our existing and upcoming production facilities. Till date, Yokohama has invested around US$ 154 million in the India plant. Around US$ 82 million has been allocated for setting up a new production unit in Visakhapatnam (Vizag).
Despite global uncertainties in the automotive sector, India seems to be doing well. As the third-largest passenger car market in the world, how does your company view its prospects at this time?
We are planning to be the fifth largest tyre player by the end of 2025. Till now, we were limited due to production constraints, but that will be over when the new facility in Vizag comes on stream. Not only will we increase production capacity, but we will also expand the business in aftermarket and OEMs with new product lines.
What do you mean by ‘new product lines’?
Yokohama India's ‘bread and butter’ tyre sizes, which form the core of its product range, range from 12 to 14 inches. The existing Bahadurgarh plant manufactures passenger car tyres with a diameter ranging from 13 inches up to 18 inches (recently added). Currently we cater to the replacement market and once Phase IV goes on stream in 2025, we will aggressively supply to OEMs as well.
What’s the status of the Vizag plant and what contribution will it make?
Civil and engineering work for the Vizag unit has already begun, and the unit is expected to be operational in 2024. This expansion will not only boost tyre production but also enable Yokohama India to manufacture various diameter tyres. In the first phase, starting in 2024, the Vizag unit will produce 20-inch tyres. This will be followed by the production of even larger 22-inch tyres a year later. This aspect will ensure the brand’s foray in the growing premium car and SUV segments.
Tell us more about the Yokohama Club Network (YCN) branded stores and why it's important for the brand?
Yokohama India has over 550 premium outlets across India, including Tier II and Tier III cities. These outlets serve as part of the Yokohama Club Network (YCN) stores in the country. The establishment of YCN stores is based on Yokohama's global philosophy of providing a world-class tyre buying experience for customers. The stores serve as a one-stop solution for all tyre-related needs and services and are equipped with trained technicians who ensure high quality service. One of the highlights of the store is the ‘In a minute’ instant claim settlement.
YCN stores also utilise digital marketing through their individual Google My Business (GMB) pages. This enables dealers to market the brand and its offerings to potential customers in their catchment area, enhancing conversions by reaching out to those actively seeking tyres for their vehicles. The significant growth in YCN stores is notable as the concept is very well accepted with our partners and customers. We have increased the YCN business from 100 stores in 2019 to over 550 today across India. They have played a crucial role, contributing to approximately 60 percent of the company's sales. Plans are in place to increase our footprint by 20 percent during this year and another 20 percent in the coming two years.
We understand many OEMs have been selling cars with imported tyres and the government has banned import of tyres now. Would this not offer an opportunity for your company?
The ban on tyre imports aligns with the "Make in India" initiative, which aims to promote domestic manufacturing and reduce reliance on imports. Yokohama India supports this decision and recognises the importance of investing in local production. Our investment in the Vizag plant reflects our commitment to the "Make in India" initiative, and positions the company to capture a larger share of the premium SUV market by offering locally manufactured, high-end tyres. By producing premium tyres domestically, Yokohama India can cater to the increasing demand for high-quality tyres in the SUV market while contributing to the growth of the Indian manufacturing sector.
This interview was first published in Autocar Professional's August 1, 2023 issue.
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