What "Cooper-Apollo" deal means for Indian tyre market?
In the last few years, I have never seen a tyre company growing as fast as Apollo Tyres. They took over Vredestien in Netherlands. Dunlop in South-Africa (which they have now sold to Sumitomo Rubber Co.).
Now they have struck a deal worth $2.5 billion with Cooper Tyres. Apollo Tyres has decided to take over a company which is 3 times larger than its own size. It needs lots of guts to do that. But, without an objection from existing shareholders and employees, I think they can pull off this deal pretty well, as Cooper Tyres is a financially sound company.As a result of which the loans and advances in the books of Apollo Tyres can be written off on time with this symbiotic deal.
But how does this deal affect the Indian tyre market? After the deal fructifies, Apollo Tyres will prefer to launch the newly acquired Cooper brand in india as soon as possible. Copper is already a reckoned name in Indian market, as it was bieng imported from last few years. They are known for their fabulous range of SUV tyres.
Now, established Indian brands like MRF, Ceat and JK are still struggling to cope up with international brands like Michelin, Bridgestone and Pirelli, therefore, they will definitely have a hard time competing with newer brands.
What should be Apollo Tyre's strategy to launch Cooper in India? From the above Indian brands, MRF has the highest acceptance. It is still the highest selling tyre brand in India. But MRF does not have many tyre sizes in thier kitty. For e.g They do not have 17" tyres for sedans. They just have one sku (stock keeping unit) of 18". You can have an MRF tyre for cars like hatchbacks and midlevel sedans but above that they don't have much. They need to come up with atleast 50 more sku's to compete with MNC's . In additiion to this, they will have to bring their tyres performance quality at par with international standards.
To compete effectively with international brands like Michelin and Bridgestone, one should have a global name which Apollo is trying to garner right now with a recent feather in their cap in the form of promotional deal with Manchester United. Even after this, they may have to struggle with brands like Michelin. But the Cooper deal is the answer to their prayers, as Cooper is itself an international brand, so it can give Michelin and Bridgestone a run for there money.
All in all it's a win-win situation for Apollo Tyre if they launch Cooper in India. After the deal with Cooper, Apollo Tyres will be no.7 tyre company in the world with a turnover of around $6.6 billion. They can easily become the no.1 tyre company in India and that too without two-wheeler tyres in their portfolio.
In the last few years, I have never seen a tyre company growing as fast as Apollo Tyres. They took over Vredestien in Netherlands. Dunlop in South-Africa (which they have now sold to Sumitomo Rubber Co.).
Now they have struck a deal worth $2.5 billion with Cooper Tyres. Apollo Tyres has decided to take over a company which is 3 times larger than its own size. It needs lots of guts to do that. But, without an objection from existing shareholders and employees, I think they can pull off this deal pretty well, as Cooper Tyres is a financially sound company.As a result of which the loans and advances in the books of Apollo Tyres can be written off on time with this symbiotic deal.
But how does this deal affect the Indian tyre market? After the deal fructifies, Apollo Tyres will prefer to launch the newly acquired Cooper brand in india as soon as possible. Copper is already a reckoned name in Indian market, as it was bieng imported from last few years. They are known for their fabulous range of SUV tyres.
Now, established Indian brands like MRF, Ceat and JK are still struggling to cope up with international brands like Michelin, Bridgestone and Pirelli, therefore, they will definitely have a hard time competing with newer brands.
What should be Apollo Tyre's strategy to launch Cooper in India? From the above Indian brands, MRF has the highest acceptance. It is still the highest selling tyre brand in India. But MRF does not have many tyre sizes in thier kitty. For e.g They do not have 17" tyres for sedans. They just have one sku (stock keeping unit) of 18". You can have an MRF tyre for cars like hatchbacks and midlevel sedans but above that they don't have much. They need to come up with atleast 50 more sku's to compete with MNC's . In additiion to this, they will have to bring their tyres performance quality at par with international standards.
To compete effectively with international brands like Michelin and Bridgestone, one should have a global name which Apollo is trying to garner right now with a recent feather in their cap in the form of promotional deal with Manchester United. Even after this, they may have to struggle with brands like Michelin. But the Cooper deal is the answer to their prayers, as Cooper is itself an international brand, so it can give Michelin and Bridgestone a run for there money.
All in all it's a win-win situation for Apollo Tyre if they launch Cooper in India. After the deal with Cooper, Apollo Tyres will be no.7 tyre company in the world with a turnover of around $6.6 billion. They can easily become the no.1 tyre company in India and that too without two-wheeler tyres in their portfolio.
