Where are sales strongest? What segments are growing rapidly?
We have seen extremely good traction in the passenger car tires, truck bus tires and the highest in the farm tire segment. The sales have been very encouraging in India, Europe and Americas
There is also a strong revival in the OE segment from last quarter onwards.
What are some of the new "norms" that will become standard for all tire makers going forward?
I believe, not only tire makers, COVID has taught everyone the new way of working. Physical meetings have been replaced with virtual meetings; product launches with a large presence of customers and media have also moved to virtual space.
Business-related travel has taken a backseat; with the flexibility to work from home, the employee presence in offices has reduced to 25% to 30%.
How did the Apollo commercial line launch in North America come about?
North America has been a target market for Apollo's commercial truck tires for quite some time as part of our global expansion plans. This program has been "in the making" for a number of years.
We have spent the past several years testing and evaluating our product performance in the U.S., benchmarking our products against Tier 1 products through a third-party testing company on U.S. roads and highways in real-world conditions.
Clearly, the North American market is one of the largest and most mature markets in the world, and we feel we are ready to make our presence known here. We see tremendous opportunity for a high-value product in the commercial vehicle space in North America. A Tier 1 product alternative, if you will.
How significant is it to bring Apollo commercial tires to North America?
The commercial truck tire business is a significant part of Apollo's heritage, particularly in India where we enjoy some 30% market share in truck tires.
We have expanded our truck tire business into other markets recently with great success.
We have two R&D centers globally, one in India adjacent to our Chennai factory, and the other in Europe, both of which employ a diverse team of engineers, chemists with Ph.D.s that design and develop our products.
The products we will bring to the North American market have been specifically designed and engineered for this market. They will be unique to North America and will not be offered in any other of Apollo's global markets.
What is the most important part of your program that a dealer should know?
We feel our offer to select dealers across the country of contractual exclusivity in specific market areas will play a significant role in dealers considering adding the Apollo brand to their product offering. We feel that as a result of them being the sole representative for Apollo commercial truck tires in their market area, it provides them with improved profitability opportunities by elevating our products and capturing a higher market value.
Couple that with our focus of not going to the fleet directly except for very large fleets, we will position select exclusive dealers in a strong profit posture by reducing competitive forces and leveling the playing field within their respective market areas. The product will be a true Tier 1 alternative, backed by unprecedented warranties and transparent policy. We are looking for few but long-term partners.
You positioned the commercial line as a Tier 1 product at a Tier 2 price point. Why is that important?
Over the past five years we have tested an array of our products in North America benchmarked against Tier 1 products in real-world conditions on U.S. roads and highways through third- party independent testing companies for over a million miles. Our products performed strongly in those tests in a range from 91% to 119% to those benchmark products in original tread life.
Then those tires were retreaded and put back in service. Some of those tires were retreaded again and are still in service on their third life cycle.
Our pricing strategy will be competitive in the Tier 2 segment of the market. We feel that strongly reinforces the value of our products to our dealer partner as well as to their fleet customer and end use.
How are supply-chain issues affecting global supply?
Of course, the current global logistics challenges are everyone's concern.
Our focus will be on domestic distribution in the U.S. from regional distribution centers. Our goal is to have consistent inventory in the U.S. and to be able to deliver products to our dealer partner within 72 hours. A container program will also be in place.
The U.S. has been given priority status within our organization in terms of production and logistics so we feel strongly we will have excellent fill rates for our partners.
How is the relaunch and expansion of the Vredestein line going?
We have continued to progress our plans for the Vredestein brand in the U.S. The launch, due to COVID, was adapted to be digital and ended up far exceeding our expectations.
We have expanded our distribution network and partnerships, and continue to do so, and are targeting continued strategic but rapid growth through partnerships with the dealer base in the U.S. and Canada.
The products are excellent, continue to test well, and dealers and their customers are very satisfied with the performance. With the launch of the new Vredestein Pinza AT, we have a more compelling and complete offering, and response continues to be strong.
What kind of investment has the company made in its North American push?
Like they say in the commercial tire business, we're here in North America for the long haul.
Between the P/LT and commercial business, our R&D investments run into tens of millions and have spanned across five years.
Apollo has launched a domestic line of reduced rolling-resistance tires, the Amazer XP, that is an approved OE fitment on a range of compact cars.
What is the outlook for 2021?
Considering the uncertainties related to COVID-19, it is difficult for us to provide an outlook for the full year. Having said that, we have healthy order books for the next few months.
However the challenges with logistics, raising freight costs and steeply increasing raw material will make it a challenging year.
Any plans for a U.S. plant?
Our presence in the U.S. market is still at a very nascent stage, and it would be too early to talk about setting up a manufacturing facility here.
We are emerging as a stronger company. Our global expansion plans are intact and still a big part of our long term strategy. The timeline for manufacturing entity realization depends largely on the success of our teams and our market share penetration. We will support them 100% to achieve our objectives.
Can Apollo grow to become a Top 10 or Top 5 tire maker?
Why not? Putting a time frame to that would be difficult, but that is surely possible.