Apollo Tyres Sees European Recovery in the Latter Half of 2025 as Premium Drive and New Capacity Gain Ground

Apollo Tyres hopes for a significant improvement in its European operating performance in the latter part of 2025, fueled by the ramping up of further manufacturing capacity and a strategic emphasis on premium segments. Following a trying period with margin stress and muted demand, the company is counting on fresh investments, product innovation, and market share gains to spur a turnaround in its key European business.

 

Expected Recovery with Increased Capacity

Apollo Tyres management has signaled that European operation performance will rebound as new capacity goes live in the latter half of 2025. Apollo's state-of-the-art Hungary plant is at the core of the strategy, which will allow Apollo to double its truck and bus radial (TBR) tyre production and broaden its portfolio to encompass up to 90% of the European TBR market requirements by the end of the year.

 

Premiumization and Product Mix

The firm has been incrementally moving its European product mix towards high-margin, ultra-high-performance (UHP) and premium passenger car tyres. The proportion of UHP/UUHP tyres in Europe increased to 48% in Q3 FY25 from 43% the previous year, supporting margins even as overall market conditions were difficult. Apollo's Vredestein brand and new products, including the EnduMile LHT for long-haul trailers, are supporting premiumization.

 

Market Share and OEM Gains:

Apollo is further strengthening its market position in the replacement segment and inroads with OEMs. New OE agreements with leading European trailer manufacturers and cutting-edge online sale strategies are further enhancing its footprint in a competitive market.

 

Demand and Margin Outlook:

While the overall European tyre market is flattish, Apollo has replicated the 3% growth achieved in the passenger car segment for H1 FY25. Margin performance within Europe has been aided by a positive product mix, less raw material cost exposure than India, and continuous cost-reduction efforts.

 

Strategic Investments and Innovation:

The business is investing in smart tyre solutions, like RFID and TPMS, to address changing customer and regulatory demands. These advances, combined with a leaner operating model and disciplined capex, are forecasted to generate strong returns and drive long-term growth.

 

Insight

Apollo Tyres' operations in Europe have also been hit by headwinds from increasing costs and stiff competition, but the group's emphasis on premium products, increased capacity, and digitally-led sales channels is starting to bear fruit. With the buildup of new capacity in Hungary and a strong pipeline of high-value products, Apollo is positioned to capitalize on growth and margin expansion in the second half of 2025. But the turnaround will depend on sustained execution, resilience in demand, and being able to manage changing market dynamics.

 

Source:

Apollo Tyres Q2 FY2025 Analyst Call Transcript

Apollo Tyres Five-Year Europe Market Plan

MotorIndiaOnline – Apollo Tyres TBR Segment Europe

Moneycontrol – Motilal Oswal Apollo Tyres Q3 FY25 Report

LinkedIn – Apollo Tyres Outlook