Coming to America: Apollo sets sights on U.S.

Tire Business photo by Don Detore
Now that the Gyöngyöshalász plant has opened, Apollo will turn its attention to bolstering its presence in the North American market, specifically the U.S. and Canada.

GYÖNGYÖSHALÁSZ, Hungary — His company's shiny, new state-of-the-art plant in Hungary had been inaugurated for a little more than three hours when Neeraj Kanwar was asked a question.

Could he foresee a day like this soon, when Apollo Tyres Ltd. is inaugurating its first plant in the U.S.?

"One-hundred percent absolutely," Mr. Kanwar answered before the question was finished. "When, don't ask me. But 100 percent. It's my heart: I have to get there. That's all I can say. The sooner the better for me."

Now that the Gyöngyöshalász plant has opened, Apollo will turn its attention to bolstering its presence in the North American market, specifically the U.S. and Canada.

"The U.S. plays a real important part for us in our growth strategy," Mr. Kanwar said. "Given now that we have two domestic markets, which is largely Europe and India, our next stop has to be the U.S."

In order for Apollo to enter the U.S. successfully, Mr. Kanwar said, the tire maker first must have product available to cover 70 percent of the market. Currently, Apollo has product to service only about 5 percent.

Apollo would use the Vredestein passenger tire brand as its main U.S. product, and once that is established, perhaps introduce the Apollo brand for heavy commercial trucks.

Mr. Kanwar said Apollo's U.S. market share is "very, very small."

"We as a company have never focused on the U.S.," he said. "There was no main, clear customer strategy."

• This story appeared in the April 24 print issue of Tire Business.

Steven Smidlein, a former executive at Goodyear and DaimlerChrysler, has been working over the past year to lay the foundation for Apollo's move to bolster its U.S. presence.

"Once we create a market and a brand, we would have to look at setting up a tire factory," Mr. Kanwar said. "Now I'm talking four to five years. But the whole thing is to create the market for the U.S. customer, and that is what Steven and his team will do."

Apollo Tyres Ltd. photo
Kanwar Neeraj, vice chairman and managing director

Mr. Kanwar said his company already has looked at three or four states to consider as sites for a new plant but said it's "too early" to disclose specifics. He said his goal is for 10 percent of Apollo's revenue to be driven by the North American market within five years.

Mr. Smidlein, based for now at Apollo's U.S. headquarters in Metuchen, N.J., continues to assemble his North American team. Within the next couple of years, the firm should have about 25 employees working toward Mr. Kanwar's goal of entering the U.S.

"(Opening the plant in Hungary) shows that the North American market is the next step," Mr. Smidlein said. "This shows the globalization of our company and what we are capable of doing."

As part of his U.S. strategy, Mr. Kanwar said he envisions opening a satellite research and development office, initially based at Apollo's R&D center in The Netherlands, to work specifically on U.S. product. Apollo has three other R&D sites — one in India and two satellite offices (in India and Germany).

Mr. Kanwar said Apollo's growth in Thailand is an example of what the firm plans for the U.S. market. Two years into the process of establishing a presence there — which he called "a very competitive landscape" — he said the tire maker is crossing the $60 million sales per year mark there.

 

Apollo Tyres Ltd. photo

Kanwar Neeraj, vice chairman and managing director

"Because of that success, I have full confidence we'll be able to do it in the U.S.," Mr. Kanwar said.

He said he is not interested in expanding into China.

Mr. Kanwar said he would be open to an acquisition despite a failed, highly publicized $2.5 billion-merger attempt with Cooper Tire & Rubber Co. in mid-2013. That deal collapsed in late 2013.

"You know I'd gone in for Cooper, and I burnt my hands over that," Mr. Kanwar said.

He said organic and inorganic growth had its advantages and disadvantages.

"Organic is something I can make, but it takes time," he said. "But I don't get any dirty baggage, which could be unions, culture, product strategies, quality, and then to change that takes much more pain.

"I'm not opposed to inorganic growth, but it has to be something that fits with the organization, fits with the culture, fits with synergies between Apollo and the acquisition. We are open to it. We keep looking around, and if something comes up, and it matches, and it's a good advantage, we'll look at it."

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