Apollo Tyres Ltd. Is a tires, tubes and flaps manufacturer and marketer. The company operates in India, Africa and Europe. It is headquartered in Gurgaon, Haryana, India. The company’s operating profit has grown in the past few years.
Strengths in the SWOT Analysis of Apollo Tyres Ltd. :
Strong Brand Image: Apollo’s Brand diversity is one of its strengths. The manufacturing units of the company are in India, Netherlands and South Africa and its sells tires under various brand names in India, Africa and Europe. The presence of various strong brands in the portfolio gives the company a credibility which gives the company a competitive advantage.
Strong Financial Performance: Apollo’s net sales grew at a CAGR of 2% in the last 5 years and its profit grew at a CAGR of 34% in the same period. Strong financial growth enhances shareholder’s value and also provides room for further expansion plans and hence market share also increases.
Emphasis on Research and Development: Apollo invests heavily on Research and Development (R&D) activities. Improvement in key performance parameters such as durability, grip and mileage is the primary focus of Apollo. This enables the company to invest in new and innovative products. Strong R&D ensures superior technical capabilities.
Market share: As can be seen from the graph, Apollo has a high market share in India. It is the 2nd highest market share holder in LCV’s and the highest market share holder in Medium and heavy commercial vehicles.
Weakness in the SWOT Analysis of Apollo Tyres Ltd. :
Labor unrest effects production: In the recent past, the company has faced various issues of labor unrest and lockouts in its plants in Durban, Vadodara etc. This affects company’s production capabilities and hence also affects the financials of the company.
Heavy dependence on Indian market: Although the company has expanded globally but the majority if the company’s revenue depends on in the Indian market (about 65.2% of its revenues were from India in FY 2015). This makes the company vulnerable to economic and political changes in India. The company needs to increase its revenues in other markets in order to mitigate the risks of depending heavily on one market.
Opportunities in the SWOT Analysis of Apollo Tyres Ltd. :
Growing Four Wheeler Industry in India: Four Wheeler Industry in India is growing continuously and has shown growth of 4% CAGR from the period of 2015-18. Also, Indian truck manufacturing has shown a growth of 7% CAGR in the same period. The growth ensures growing opportunity in the 4-wheeler market as well as the commercial vehicle segment.
Expansion in Two Wheeler segment: Apollo aims to cover 85% market considering its current product range. With the growth in the 2-wheeler market, Apollo can enhance its potential in this market.
Global Expansion: From the past 3 years, the company is in an expansion mode with expansion in countries like Lebanon, Qatar and Jordan. The company should continue the same and foray into newer markets.
Threat in the SWOT Analysis of Apollo Tyres Ltd. :
Strong competition: Competition in the tire industry especially in India is very high with competitors like MRF Tyres, JK Tire and Goodyear is present. Fierce competition can affect sales and the company’s expansion plans.
Cheaper Tyres in China: Imported Chinese tire products are cheaper and hence presents a stiff competition in the market. Chines imports can adversely affect Apollo’s profitability.
Volatility in rubber production: Rubber production in India is volatile and generally lower than the demand created and hence rubber price fluctuate considering the demand. This affects the pricing strategy of the company.
