Apollo Tyres to Double Tyre Production over Next 18 Months

With Apollo Tyres commencing production at its factory in Gyöngyöshalász, Hungary in the last quarter of 2017, the company has grand plans for expansion in Europe. With the contribution form the factory in Hungary, the tyre manufacturer will be able to almost double production over the next 18 months.

Commenting on Apollo’s results for the first quarter of 2018, the company’s chief financial officer, Gaurav Kumar stated that by the second half of 2019, the Gyöngyöshalász is slated to achieve a daily capacity of 16,000 car tyresbefore the end of March 2019. Thus, its two plants in Europe will have an output of 35,000 passenger car tyres on a daily basis and more than a third of the tyres made at the Gyöngyöshalász plant is likely to be for OEM customers.

At the formal opening of the Hungarian plant, Apollo’s president for Europe and the Americas, Mathias Heimann, had said that Apollo was in line to get homologations from several premium brands in Europe. While currently tyres are imported from India for catering to OEM requirements, this will eventually replaced by supply from the Hungarian factory. Thus, the increase in output from Apollo’s European factories will help it to meet both OEM and replacement demand.

Gaurav Kumar had confirmed that Apollo is expecting its OEM business to grow to the point where the OEM-replacement mix in Europe would be 20-80 per cent for passenger car segment in Europe, excluding the space master segment.

The plant in Hungary is technologically far more advanced than its other production facility in Europe, the Apollo Vredestein factory in Enschede, Netherlands. Hence, Apollo is more likely to make tyres for its OEM customers in Hungary. Cost is another consideration when it comes to OEM customers as tyre manufacturers make less profit on each original equipment tyre when compared to replacement market tyre.

While the Gyöngyöshalász plant will produce 16,000 passenger car tyres in Phase 1, once production is ramped up and the facilities are expanded, the plant is expected to produce three times as many tyres by the time it reaches final capacity. The factory is also slated to make tyres for commercial vehicles in Phase 1 and will eventually reach a capacity of 675,000 pieces a year by 2020.