Apollo eyes premium space with Vredestein

Apollo Tyres plans to go in for a dual brand strategy with the recent launch of Vredestein in India. The company had acquired this Netherlands-based premium brand in 2009.

Satish Sharma, President-Asia Pacific, Middle East & Africa, told Autocar Professional that, with its European DNA, Vredestein can compete with the likes of Michelin, Bridgestone, Continental and Pirelli in the Indian car and motorcycle space.

According to him, Vredestein will be the best fit for luxury models such as the Mercedes S-Class going down all the way to the Toyota Corolla. Apollo’s appeal, on the other hand, may climb all the way from the WagonR to Toyota Camry. “So, it is a complementary offering where the Vredestein brand comes into play when appeal for Apollo starts reducing,” said Sharma. 

Imported tyres have a hard time coping with India’s harsh driving terrain and hardly last 35,000 kilometres of travel. Realising this, the R&D teams at Apollo went all out to extend Vredestein’s life by nearly 20 percent.  The brand’s local content is around 70 percent right now and efforts are underway to enhance this further with the help of key suppliers. 

Reliance Industries, for instance, has already started producing certain grades of synthetic rubbers while Bekaert is coming out with steel wires. Other vendors are working on fabrics as part of the drive to source more locally. “With the right suppliers in place, localisation will certainly improve,” said Sharma. 

Meanwhile, Apollo is also betting big on its fifth facility in India and seventh globally. Located close to 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 over 15,000 car tyres and 3,000 truck/bus radials everyday.

The company is also upbeat about its radial tyre facility housed within its Limda plant in  Vadodara, Gujarat. Targeted at the two-wheeler segment, the initial capacity will be 30,000 motorcycle radials and 60,000 cross-ply tyres every month. 

The overseas markets are also important to Apollo and revenues from exports have been on the rise  from nine percent of turnover in FY 21 to 15 percent in the first half of this fiscal. There are challenges though in the form of high commodity prices which are causing demand to shift towards more affordable options. Some fleet owners, for instance, prefer bias tyres to more expensive radials because of the ‘huge cost push”. 

As for raw materials, two distinct themes have been playing out since Covid-19 first broke out across India. The first wave last year saw lockdowns and demand contraction accompanied by a fall in costs. The second wave was about the recovery story both in vehicle volumes and the buoyancy in the replacement market leading to a rise in prices.

This has been borne out by the raw material cost index which jumped by about 35 percent in a year and manufacturers like Apollo have passed on the cost burden to consumers . In the process, fleet operators have been hard pressed to buy vehicles though Sharma said this could be a temporary phase. 

All this is happening at a time when trucks are slowly getting back on track but other headwinds are also playing out in the form of the container shortage, port congestion, high fuel prices, the semiconductor crisis and the huge unknown of the third wave of the pandemic. The next few months will throw up a clearer picture even while the industry will be hoping for the best.