Description
This is a case style apollo tyres along with the indian tyre industry.It also includes SWOT analysis and PESTLE analysis for Apollo tyres.
1
Apollo Tyres – Case Study
July 27,2009
Tyre Industry – Fact Sheet
Demand for Tyres SegmentDemand for Tyres Wise
4%
6%
19%
LCV Type Tyre Bus Truck Car Type Passenger Tractor Two Wheelers Others
49%
18%
Source: ATMA, ICRA
4%
Indian Market ? India has 2.61 lakh villages connected by 6.23 lakh Kms of metalled roads & 9.81 lakh Kms of Unmetalled roads. ? Daily traffic of over 4.12 lakh trucks, 1.27 lakh buses, 7.23 lakh cars & thousands of taxis, two wheelers, three wheelers & tractors. ? Indian Tyre industry is Rs. 13,000 crore industry & still growing.
Apollo Tyres Case Study
Friday, January 18, 2013 2
Tyre Industry – Key Players in Indian Market
Sales of Tyres company Wise
Sales
11% 2% 10% 12% J K Inds. 33% 12% 4% MRF Goodyear India Apollo Tyres CEAT
16%
Key Facts about Indian Tyre Industry
? Tyre Industry is highly raw-material intensive with raw material cost accounting for 70% of the cost of production. ? The tyre industry consumes nearly 50% of the natural rubber produced in the country.
Friday, January 18, 2013 3
Tyre Industry Growth by Segment
600 500 IN 1000 numbers 400 300 200
Key Takeaways
• Tyre Industry growing at the
rate of 9% CAGR. • two Wheeler and Passenger are two segments driving the growth with 9% and 15% CAGR.
100
0 1996 1998 LCV 2000 2002 2004
Total Tyre Demand
Bus Truck Car
Passenger
Source: ATMA, ICRA
Two Wheelers
Friday, January 18, 2013
Tractors
4
Apollo Tyres Case Study
Apollo Tyres SWOT Analysis
Strengths ? Dominant Leadership in the dominant industry segment of truck & bus tyres. ? Extensive Distribution network. ? Global quality standards & international process & system certification. ? Economies of transportation cost on account of closeness to natural rubber growing belt. ? Strong Brand recall value.
Apollo Tyres Case Study
Weakness ?No presence in two & three wheeler segment. ?Low profit margins due to raw material cost push. ?Inability to pass on the higher cost to consumers.
5 Friday, January 18, 2013
Apollo Tyres SWOT Analysis
Opportunities ? Positive growth in vehicle production in the immediate future, is expected to lead to growing demand. ? Continuous thrust in road infrastructure and construction of expressways and national highways. ? Apollo‘s leadership position in the commercial vehicle segment will enable the company to leverage new and related business opportunities. Threats
?There is a need to prepare for imports from neighbouring countries at competitive prices, which have been rising in the recent past. ?Ever present challenge of raw material price volatility.
6
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis - Political
? Liberalized Tax Regime adopted for Imports of Tyres. ? Efforts to bring in more Foreign Investments in the Industry. ? Emphasis laid on signing more Free Trade Pacts with neighboring countries thus bringing in more Competitors into the industry and at the same time increasing the number of buyers by bring in more automobile companies. ? No restriction on Export of Tyres thus encouraging exports by carrot and stick approach. Volume of imports directly pegged with the value of exports. ? Raw Material required for Tyres can be imported freely.
7
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis - Economic
Demand for Tyres Segment Wise
6.5 34.2
OEM
Replacement
58.9
Exports Government and STU
? The level of economic activity, performance of domestic automotive industry, and the faring of the transport sector directly influence the performance of the tyre industry in India. ? GDP Growth rate averaging 6.5% for the last years. ? Prospects of Tyre Exports look healthy and favorable with all major plants situated close two ports (in Gujrat), thus lowering the logistics cost. ? Strong future growth prospects for automobile points towards equally increased demand for complement products such as Tyres and with prevailing low interest rates, manufactures can augment the production capacity.
8
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis – Socio-Cultural
? With strong growth, consumer sensitivity is decreasing towards cost or price, thus leading to increased demand for (comfortable and comparatively expensive) Radial Tyres. ? High % of replacement markets (63% in passenger car segment) leads towards greater dependence towards retail sales, thus company needs to strengthen the retail distribution channel. ? Increasing Brand Consciousness among ballooning middle class consumers (yearly income between 60,000 and 2,15,000) calls for investments towards brand building and brand visibility. ? At 26.3 years of Median age and increasing share of services sector in GDP coupled with Two wheeler tyres constituting a largest segment (38% share) of tyres demand demands increased concentration on youth and designing products to meet their needs.
9
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis – Technological
? Radialisation of tyres is likely to result in lower replacement demand. ? According to ATMA, even if only 25% of the truck and bus segment is radialised, the savings in fuel costs would be around Rs. 7,500 million. ? TREAD, the portion of the tyre which meets the road surface. Hence, by applying a new TREAD over the body of the worn tyre, a fresh lease of life is given to the tyre. ? New Methods (Cold Retreading) introduced in treading technology increase the efficiency of ‘tyre retreading’. ? At present only 3-4 large companies are in the organized sector of tyre retreading thus opening an opportunity for commercial profitable re treading.
10
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis – Environmental and Legal
Environmental ? Increased consumer consciousness towards environmental calls for ‘greener products’ and green tyres. ? Demand shall increase for more efficient and long lasting tyres. ? Use of Increased proportion of Non petroleum content in tyre shall increase.
Legal
? Stringent standards being introduced for various categories of tyres. ? Harsh measures and penalties introduced by Supreme Court of India on Overloading of Commercial Vehicles thus resulting in increased life for tyres.
11
Apollo Tyres Case Study
Friday, January 18, 2013
Future Directions
Radial Tyres for Truck and Bus segments
? Low growth of radialized tyres in Truck and Bus segments calls for greater focus towards this trend. Adequate emphasis on customer education and marketing radialized tyres as service ‘better quality and longer life shall help improve company sales in this segment.
Increased Emphasis on Re Treading
? National Highway Projects, especially Golden Quadrilateral Project and Highways connecting North-South and East -West corridors coupled with reduction in overloading and improved condition of road network shall involve higher level retreading and thus offer added financial benefits.
12
Apollo Tyres Case Study
Friday, January 18, 2013
Future Directions
Focus on two & three wheeler segment
? Large Part of demand pie chart is occupied by two wheeler & three wheeler market; company should focus on this segment & try to create the niche for it’s brand in this segment also.
Agriculture not the focal point anymore
? Correlation with agriculture is found negative as per research data from BCG group thus there should be definite change in the Marketing strategies as agriculture is not affecting the sales of Tyres.
13
Apollo Tyres Case Study
Friday, January 18, 2013
Thank You
Friday, January 18, 2013
14
doc_978887259.pptx
This is a case style apollo tyres along with the indian tyre industry.It also includes SWOT analysis and PESTLE analysis for Apollo tyres.
1
Apollo Tyres – Case Study
July 27,2009
Tyre Industry – Fact Sheet
Demand for Tyres SegmentDemand for Tyres Wise
4%
6%
19%
LCV Type Tyre Bus Truck Car Type Passenger Tractor Two Wheelers Others
49%
18%
Source: ATMA, ICRA
4%
Indian Market ? India has 2.61 lakh villages connected by 6.23 lakh Kms of metalled roads & 9.81 lakh Kms of Unmetalled roads. ? Daily traffic of over 4.12 lakh trucks, 1.27 lakh buses, 7.23 lakh cars & thousands of taxis, two wheelers, three wheelers & tractors. ? Indian Tyre industry is Rs. 13,000 crore industry & still growing.
Apollo Tyres Case Study
Friday, January 18, 2013 2
Tyre Industry – Key Players in Indian Market
Sales of Tyres company Wise
Sales
11% 2% 10% 12% J K Inds. 33% 12% 4% MRF Goodyear India Apollo Tyres CEAT
16%
Key Facts about Indian Tyre Industry
? Tyre Industry is highly raw-material intensive with raw material cost accounting for 70% of the cost of production. ? The tyre industry consumes nearly 50% of the natural rubber produced in the country.
Friday, January 18, 2013 3
Tyre Industry Growth by Segment
600 500 IN 1000 numbers 400 300 200
Key Takeaways
• Tyre Industry growing at the
rate of 9% CAGR. • two Wheeler and Passenger are two segments driving the growth with 9% and 15% CAGR.
100
0 1996 1998 LCV 2000 2002 2004
Total Tyre Demand
Bus Truck Car
Passenger
Source: ATMA, ICRA
Two Wheelers
Friday, January 18, 2013
Tractors
4
Apollo Tyres Case Study
Apollo Tyres SWOT Analysis
Strengths ? Dominant Leadership in the dominant industry segment of truck & bus tyres. ? Extensive Distribution network. ? Global quality standards & international process & system certification. ? Economies of transportation cost on account of closeness to natural rubber growing belt. ? Strong Brand recall value.
Apollo Tyres Case Study
Weakness ?No presence in two & three wheeler segment. ?Low profit margins due to raw material cost push. ?Inability to pass on the higher cost to consumers.
5 Friday, January 18, 2013
Apollo Tyres SWOT Analysis
Opportunities ? Positive growth in vehicle production in the immediate future, is expected to lead to growing demand. ? Continuous thrust in road infrastructure and construction of expressways and national highways. ? Apollo‘s leadership position in the commercial vehicle segment will enable the company to leverage new and related business opportunities. Threats
?There is a need to prepare for imports from neighbouring countries at competitive prices, which have been rising in the recent past. ?Ever present challenge of raw material price volatility.
6
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis - Political
? Liberalized Tax Regime adopted for Imports of Tyres. ? Efforts to bring in more Foreign Investments in the Industry. ? Emphasis laid on signing more Free Trade Pacts with neighboring countries thus bringing in more Competitors into the industry and at the same time increasing the number of buyers by bring in more automobile companies. ? No restriction on Export of Tyres thus encouraging exports by carrot and stick approach. Volume of imports directly pegged with the value of exports. ? Raw Material required for Tyres can be imported freely.
7
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis - Economic
Demand for Tyres Segment Wise
6.5 34.2
OEM
Replacement
58.9
Exports Government and STU
? The level of economic activity, performance of domestic automotive industry, and the faring of the transport sector directly influence the performance of the tyre industry in India. ? GDP Growth rate averaging 6.5% for the last years. ? Prospects of Tyre Exports look healthy and favorable with all major plants situated close two ports (in Gujrat), thus lowering the logistics cost. ? Strong future growth prospects for automobile points towards equally increased demand for complement products such as Tyres and with prevailing low interest rates, manufactures can augment the production capacity.
8
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis – Socio-Cultural
? With strong growth, consumer sensitivity is decreasing towards cost or price, thus leading to increased demand for (comfortable and comparatively expensive) Radial Tyres. ? High % of replacement markets (63% in passenger car segment) leads towards greater dependence towards retail sales, thus company needs to strengthen the retail distribution channel. ? Increasing Brand Consciousness among ballooning middle class consumers (yearly income between 60,000 and 2,15,000) calls for investments towards brand building and brand visibility. ? At 26.3 years of Median age and increasing share of services sector in GDP coupled with Two wheeler tyres constituting a largest segment (38% share) of tyres demand demands increased concentration on youth and designing products to meet their needs.
9
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis – Technological
? Radialisation of tyres is likely to result in lower replacement demand. ? According to ATMA, even if only 25% of the truck and bus segment is radialised, the savings in fuel costs would be around Rs. 7,500 million. ? TREAD, the portion of the tyre which meets the road surface. Hence, by applying a new TREAD over the body of the worn tyre, a fresh lease of life is given to the tyre. ? New Methods (Cold Retreading) introduced in treading technology increase the efficiency of ‘tyre retreading’. ? At present only 3-4 large companies are in the organized sector of tyre retreading thus opening an opportunity for commercial profitable re treading.
10
Apollo Tyres Case Study
Friday, January 18, 2013
PESTAL Analysis – Environmental and Legal
Environmental ? Increased consumer consciousness towards environmental calls for ‘greener products’ and green tyres. ? Demand shall increase for more efficient and long lasting tyres. ? Use of Increased proportion of Non petroleum content in tyre shall increase.
Legal
? Stringent standards being introduced for various categories of tyres. ? Harsh measures and penalties introduced by Supreme Court of India on Overloading of Commercial Vehicles thus resulting in increased life for tyres.
11
Apollo Tyres Case Study
Friday, January 18, 2013
Future Directions
Radial Tyres for Truck and Bus segments
? Low growth of radialized tyres in Truck and Bus segments calls for greater focus towards this trend. Adequate emphasis on customer education and marketing radialized tyres as service ‘better quality and longer life shall help improve company sales in this segment.
Increased Emphasis on Re Treading
? National Highway Projects, especially Golden Quadrilateral Project and Highways connecting North-South and East -West corridors coupled with reduction in overloading and improved condition of road network shall involve higher level retreading and thus offer added financial benefits.
12
Apollo Tyres Case Study
Friday, January 18, 2013
Future Directions
Focus on two & three wheeler segment
? Large Part of demand pie chart is occupied by two wheeler & three wheeler market; company should focus on this segment & try to create the niche for it’s brand in this segment also.
Agriculture not the focal point anymore
? Correlation with agriculture is found negative as per research data from BCG group thus there should be definite change in the Marketing strategies as agriculture is not affecting the sales of Tyres.
13
Apollo Tyres Case Study
Friday, January 18, 2013
Thank You
Friday, January 18, 2013
14
doc_978887259.pptx