GENEVA, Switzerland (March 3, 2010) — India's Apollo Tyres Ltd. is scrapping plans for its own tire plant in Europe and instead will double capacity at the Vredestein Banden factory in Enschede, Netherlands, it acquired last year.
Apollo is planning to boost the Dutch plant's car tire output to 10 million units in a series of steps, according to Chairman and Managing Director Onkar Kanwar, speaking in an interview at the Geneva Motor Show. He did not quantify the investment needed for the project nor comment on the timeline.
Prior to buying Vredestein last year, Apollo had been scouting Europe for an appropriate site for a radial passenger tire plant. It had budgeted $300 million for the project, which in early 2008 seemed destined for Hungary. The plant was to have annual capacity of up to 7 million units and employment of up to 1,000.
Mr. Kanwar did not rule out completely the idea of a greenfield plant in Europe at a later time. For now, though, Apollo will concentrate on the Vredestein expansion and upgrading the Durban and Ladysmith, South Africa, plants of its Apollo Tyres South Africa subsidiary there.
Meanwhile, the company is developing a branding strategy, using its existing brands, and selecting appropriate branding structures in the different geographic markets around the world.
Once that process is complete, the company will then decide where it needs to add capacity to fulfil its brand development plan, Mr. Kanwar said. Ultimately, Apollo intends to make the tires for the European market in the European sphere.
He said Apollo has no spare capacity and there is an excess of demand for its tires over its capacity, so it needs to add capacity quickly.
It is in the process of bringing on stream a radial car and truck tire plant in Chennai, India, that should be sufficient to serve the needs of the domestic market for some time to come, he noted.