ATLANTA — It begs the question: With all the emphasis and resources that Apollo Tyres Ltd. is expending on the North American market, could a greenfield plant here be its next big project?
After all, it would seem logical, given its push not only in the passenger tire market, with its recent relaunch of the Vredestein brand, but also with its launch of Apollo-branded commercial tires.
The short answer: No.
But the more intriguing answer? Give it three to five years, and that answer could change.
After investing upwards of $20 million into its North American product design and launch, the Indian tire maker must "settle our assets, as we have been investing and investing and investing," Apollo Chairman and Managing Director Onkar Kanwar told Tire Business.
"People are looking at short term," Mr. Kanwar said. "In this kind of field, in any industry, they look at quarterly results. We have been putting a lot of emphasis on creating assets. The idea is to seek these assets for the next two or three or four years, and meanwhile develop this market, seize the market, then go in a big way.
"Hopefully by then, we'll be able to think of a greenfield plant."
Mr. Kanwar said as the company continues to build its North American base within the next three to four years — with a goal of $200 million in sales — "Then we will start thinking of setting up a base there, so that we can treat the local market and be close to the OEMs. The idea is, in the first year to be one of the most respected tire manufacturers."
Mr. Kanwar, along with his son, Vice Chairman Neeraj Kanwar, said the Gurgaon, India-based tire maker has been able to cut "bad" costs significantly over the last few months, as it adjusts to pandemic-related sales decreases.
The company identified and eliminated excess travel, warehousing, offices and manpower that have helped the bottom line. In fact, fixed costs have decreased 14%, according to Neeraj Kanwar.
Apollo's fiscal year, which runs from April through March, "has been extremely good," except for first two months, Neeraj Kanwar said.
"Ever since then, India opened up, and the automotive industry really started coming back," he said, noting that agricultural tire sales have been particularly strong, with 60% to 70% growth in India.
The commercial market remains down, he said, but he sees positive trends. In the fourth quarter (period ending March 31), both passenger and commercial OEMs in India have shown double-digit growth.
"People are starting to look at buying more cars for themselves and not taking public transport," Neeraj Kanwar said.
Research and development continues to remain a priority, he said, especially as the commercial line rolls out in North America.
And that may mean another expansion in the U.S.: a satellite R&D office.
"My own vision — depending on the U.S. market and how our team is able to do — eventually we would need a satellite division in the U.S. market," Neeraj Kanwar said. "You have to understand the customer, you have to be sitting there eating what he's eating and how he's spending his time on the vehicle.
"You have to understand the local needs and the local desires. Timing-wise I don't know when, but it could happen in the near future, or in the next four to five years, but definitely we are going in the right direction."
He foresees those employees as local hires.
"That's my vision," he said. "I really have a belief in that because people need to be there in (the U.S.) to know your customer much better."
