In an exclusive interview with MTD Senior Editor Mike Manges, Neeraj Kanwar, managing director of India-based tiremaker Apollo Tyres Ltd., shared his perspective on the recent decision to impose tariffs on Chinese passenger and light truck tires.
In the past, Kanwar has stated that Apollo does not have near-term plans to bring its line of consumer tires to the U.S. However, the company does have entree to the domestic market thanks to its ownership of Vredestein Banden B.V., which operates in the U.S. and Canada through its Vredestein Tyres North America Inc. division. (Apollo acquired Vredestein from bankrupt Russian tiremaker Amtel-Vredestein N.V. this past May. See Apollo completes acquisition of Vredestein.)
MTD: Does the decision to place additional tariffs on certain Chinese passenger and light truck tires give a competitive advantage to Indian tire manufacturers, and if so, on what scale?
Kanwar: Yes, on an obvious kind of level it does -- and not just Indian manufacturers but many others from around the world, which would include South American companies because of their locational advantage. The scale would depend on each company's ability to leverage this opportunity.
However, I strongly believe that for anyone to capitalize on this depends on three aspects. One, capacities and that company's desire, willingness, preparedness and of course, ability to leverage the situation. Two, the company needs to have products that will work well for the American customer on a longer term -- or else not only will the opportunity be lost, it also leaves the company with a negative image. And three, pricing. While I have not studied this fully, the impression I have is that the vacuum is at a price band which might not suit many players in the industry.
MTD: Have any tire companies that currently build product in China contacted Apollo about moving production to India via an off-take manufacturing agreement (i.e. Apollo building tires for said firms) or some similar arrangement?
Kanwar: At present in the area of manufacturing, our focus is entirely on increasing our capacities and efficiencies to service our three key markets of India, South Africa and Europe. Our needs in this area are growing very fast and we need to be ready to address some of tomorrow's demands.
MTD: At the moment, Apollo does not export car and light truck tires to the U.S. Does President Obama's decision change this strategy, and if so, in what way?
Kanwar: Not really. As you are aware, we have not really focused much on the U.S. market yet. The U.S. holds great potential and when we do decide to sell Apollo tires in the U.S., it will be a well-thought through and well-planned initiative. We will not take on a market as large and diverse as the U.S. in an ad hoc manner.
MTD: Now that Chinese tires will be subject to large tariffs over the next three years, does this open the door for Apollo to ship entry-level consumer tires to the U.S.?
Kanwar: Apollo products are not in the same price or quality bracket in any of the markets we operate in with the average Chinese tire. We will address the North American market in due course with a comprehensive solution.
MTD: Will Apollo somehow leverage Vredestein to supply tires?
Kanwar: Vredestein is in a completely different price position (than entry-level Chinese tires).
"However, there might be a small advantage here in case there is a demand-supply gap that opens up due to the non-availability of Chinese tires," he adds.
