Home >Companies >News >Apollo Tyres’s Neeraj Kanwar eyes US market again, 3 years after Cooper fiasco
Neeraj Kanwar, vice-president and managing director, Apollo Tyres. Photo: Ramesh Pathania/Mint
Neeraj Kanwar, vice-president and managing director, Apollo Tyres. Photo: Ramesh Pathania/Mint

Apollo Tyres’s Neeraj Kanwar eyes US market again, 3 years after Cooper fiasco

Apollo Tyres MD Neeraj Kanwar puts together a small R&D team, hires business head for North America to make inroads in the world's biggest tyre market

New Delhi: Neeraj Kanwar has put together a small research and development (R&D) team focused on the US and hired a business head for North America in his second attempt in three years to enter the world’s biggest tyre market.

The vice-chairman and managing director of Apollo Tyres Ltd has hired Steven Smidlein from Goodyear Tire and Rubber Co. as senior vice-president for north America. Smidlein will be responsible for building the brand and sales in north America for both Apollo and Vredestein, the Dutch tyre-maker Apollo acquired in 2009.

Apollo Tyres is also in the process of hiring two executives in R&D who will work in tandem with the firm’s R&D hub in Frankfurt to develop products for the US market, Kanwar said in an interview.

“A lot of emphasis is on building products. American vehicles are different from (those in) Europe. Our coverage of product mix is only 10% of the American car market. First challenge is to take it to 70%. That will only be done through R&D," Kanwar said.

Apollo knows how to win in price-sensitive markets, explained Abdul Majeed, partner and auto practice leader, PricewaterhouseCoopers (PwC). Now, it will have to build products for customers who are quite willing to pay (for good products), he added.

Apollo does export to the US—roughly 150,000 units per year, just a fraction of the $47 billion market in which 300 million tyres are sold each year.

This is Kanwar’s second stab at entering the US after being thwarted the first time. Apollo announced a deal to buy Cooper Tire & Rubber Co. for $2.5 billion (around Rs14,575 crore then) on 12 June 2013, but the acquisition fell through because of obstacles created by Cooper’s Chinese joint venture partner.

Had the deal gone through, it would have been the largest in India’s automotive industry, ahead of Tata Motors Ltd’s $2.3 billion purchase of Jaguar Land Rover in 2008. It would have made Apollo the seventh largest tyre maker in the world with control over Cooper’s 14 manufacturing plants around the world and a combined annual revenue of $6.5 billion.

Today, Apollo ranks 16th by revenue, according to Tyrepress, a trade journal. It has set itself a target of becoming a $6 billion company globally by 2020 from around $1.8 billion. The fillip from the US market will only come in the next decade, said Kanwar.

“In our tyre business, once you sustain $100 million per annum turnover in the US then you look at sourcing and manufacturing facilities as freight is very expensive," he said. “We have just put the seeds in marketing and distribution. About 4-5 years from now, we will look at opportunities for setting up a factory and local sourcing."

Without succeeding in the US, it will be difficult for Apollo Tyres to make a mark globally, said Majeed of PwC.

The US market will keep adding 16-17 million vehicles every year, according to him. Besides, with a vehicle population of 200 million, the US is a huge replacement market.

Had Kanwar succeeded in buying Cooper, it would have given him an easy entry into China—the world’s largest tyre market. But, for now, China seems to be off the radar of Apollo Tyres. “I like Chinese food. But I don’t like the Chinese (market)," Kanwar said.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePapermint is now on Telegram. Join mint channel in your Telegram and stay updated

My Reads Redeem a Gift Card Logout