Alliance Tire has 'boots on ground' in Latin America

By Stephen Downer, Special to Tire Business

MEXICO CITY — Off-highway tire maker Alliance Tire Group (ATG) is aiming to boost its sales in Latin America 12 months after being acquired by Tokyo-based Yokohama Rubber Co. Ltd (YRC).

“In Latin America we have not really scratched the surface,” Dhaval Nanavati, ATG's president for the region, told Tire Business in a March 10 telephone interview. “The market is huge. We see growth, absolutely.”

Mr. Nanavati is also vice president/sales for Alliance Tire Americas Inc., an ATG subsidiary that sells agricultural, forestry, construction and OTR tires under the Alliance, Galaxy and Primex brands.

YRC agreed to pay global investment company KKR & Co. L.P. and other interested parties $1.18 billion for ATG in March 2016.

Previously, Mumbai, India-based Alliance's main focus was on markets in Europe and the United States, according to Mr. Nanavati. “Now our focus is on emerging markets, including Latin America.”

He said that ATG's “under-penetration” of Latin America had left much room for improvement. “My best guess is that we have a 2-3 percent market share” currently, he said, declining to put a value on that stake. ATG has a global turnover in excess of $500 million a year, according to its website. (http://www.atgtire.com/)

While identifying Argentina, Ecuador and Chile as the company's largest markets in the Latin America region, Mr. Nanavati added that Brazil and Peru have the greatest growth potential.

“We see Brazil as being more stable than last year and the year before.”

Asked whether ATG plans to set up a manufacturing base in Latin America, Mr. Nanavati said: “This is something we are continuously evaluating. If there is a possibility, we will look into it.”

But he stressed that ATG already has sufficient production capacity. “Now our focus is on emerging markets, including Latin America. Right now our focus is not capital investment.”

According to Mr. Nanavati, ATG's head office in Mumbai previously dealt directly with importers in Latin America. “What we are doing now is having boots on the ground. We are investing in people in the market.”

The company, which operates independently of YRC, according to Mr. Nanavati, will employ a staff of about 10 in the region in 2017 — working in areas such as customer, sales and technical services. “In the next three years this could increase to 20.”

The executive said that “our way-forward strategy is to keep ATG completely independent. Yokohama wants it to be that way.”

On the marketing side, “in 2017, we will be using more social media and engage in exhibition and shows to promote the product,” Mr. Nanavati added in an email. “We will also rely on end-user training (and) dealer training to help our customers understand the technical superiority and TCO (total cost of ownership) of our product offering.”

Mr. Nanavati is based in Alliance's U.S. headquarters in Wakefield, Mass. He has been with ATG since 2011 and has worked in both the company's original equipment and aftermarket sales organizations. He has a master's degree from Massachusetts Institute of Technology (MIT).

Alliance was founded in Israel in 1950. In the early 1960s, the company began manufacturing front and rear diagonal tractor tires, according to its website, and in the early 80s, it designed and manufactured its first radial tractor series of tires.

A number of firsts followed for the brand: In 1992, Alliance claims it was one of the first tire companies to develop diagonal flotation tires. By the end of that decade, Alliance noted, it “was the first company to develop and present the first radial flotation tires. During the 90s, Alliance started to develop forestry tires as well as developing and manufacturing steel-belted flotation radial tires. In the early 2000s, Alliance enjoyed an impressive growth momentum, supported by massive developments of new product families and significantly expanded its product range.”

In 2007 the Mahansaria family — backed by a private equity fund Warburg Pincus L.L.C. as its partner — acquired Alliance.

Stephen Downer is a Mexico-based freelance writer who covers that country and Latin America for Tire Business and its Latin America e-newsletter.