ESSEN, Germany—Apollo Tyres Ltd. has narrowed its search for the tire plant it's planning to build in Europe to two sites, in Hungary and Slovak Republic, according to Luis Ceneviz, president, Apollo Vredestein B.V., responsible for Apollo Tyres' Europe, Sub-Saharan Africa and Americas businesses.
Apollo's board of directors recently approved an investment of $685 million over four years to build a car and truck tire plant in Eastern Europe, but until now the Indian tire maker hadn't released details about possible sites. Ceneviz, speaking at the Reifen show in Essen, said Apollo hopes to make a final decision in the next two to three weeks.
The company's board said it envisions a plant with capacity for 16,000 passenger and 3,000 truck tires a day at full capacity. That equates to about 900,000 metric tons of processed rubber a year, but Ceneviz said the capacity in the first phase will be about 250,000 tons.
Neeraj Kanwar, vice chairman and managing director of Apollo, said via email the firm hopes the plant will be complete in four to five years.
“Apollo Tyres is currently unable to meet the growing demands for both Apollo and Vredestein tires for the European market, due to the capacity constraints at our facility in Enschede, Netherlands,” Kanwar said. “This, along with the steady recovery in the automotive market in Europe, has led us to this decision to prioritize our investments in a greenfield (plant) in Eastern Europe.”
Ceneviz, who's been head of Apollo Vredestein since late 2012, said the plant will be built on a modular plan, allowing it to be expanded gradually and efficiently when certain demand levels are reached.
Apollo's search for a plant started with 11 sites, Ceneviz said. The selection criteria comprise labor skills, costs, raw materials and infrastructure, along with investment incentives offered by the nations and/or regions being considered.
The plant will support Apollo's “ambitious and aggressive” growth strategy in Europe, according to Marco Paracciani, global chief marketing officer, who said the group had recently “seen a bottoming out of a negative trend and (where) Apollo has outpaced the market.”
Apollo Tyres, he said, had grown 17 percent in the last 12 months in the replacement market in Europe—against an average market growth of only 5 percent—and built on its market share, which on average in Europe is about 3 percent.
“It is a small number but we take comfort that in the largest market in Europe, Germany, we now have a 6-percent market share. This places us among the top five players in the country,” the Apollo marketing chief said.
Europe represents nearly 30 percent of Apollo's global sales, according to the firm's recently released fiscal 2014 results. That amounted to $685 million last year.
Headquartered in Gurgaon, India, Apollo operates eight units—four in India, one in the Netherlands and three in Southern Africa—with regional sales and marketing sites in Dubai and Bangkok.