Bridgestone, Apollo roll their wheels beneath the auto boom

The market gets set for a brand war as new labels hit the road and companies look to expand their share of the organised market

New tyre brands are making a beeline for India. Encouraged by a robust and consistent demand for cars across categories and segments, Bridgestone is bringing in its value label, the all-American Firestone while Apollo Tyres has just entered the two-wheeler tyre market. Growing demand and the emergence of brand-conscious customers looking for value purchases are the key reasons, say companies, that are encouraging them to get their wheels on the road.

Bridgestone, the world's largest tyre maker, launched Firestone in India a few days ago. Firestone, (a 100-year old American brand today fully owned by Bridgestone, a Japanese company) will ply its wares in the budget passenger car category in India. It will take on the likes of MRF, JK Tyre, Apollo and Ceat. Apollo has just entered the two-wheeler market and two years ago, it brought in a premium Dutch brand, Vredestein, hoping the auto boom will help expand the market and thereby the demand for branded tyres.

Interestingly, the emergence of new brands is also reflective of changing market behaviour. Typically, foreign tyre brands command a premium in the range of 10-20 per cent over cheaper Indian options. But, with the creation of new segments like compact performance hatchbacks (Fiat Punto Abarth and Maruti Suzuki Baleno RS and new compact SUVs) the lines have been redrawn. Consumers are keen to buy branded tyres but at the same time look for affordable labels. And this, many believe, has prompted Bridgestone to jump into the value market.

"Bridgestone is for the quality and performance seeker and it will remain like that. But, a chunk of the buyers are value seekers and that is where Firestone enters the market. Firestone is a value for money brand compared to Bridgestone," said Vaibhav Saraf, senior general manager (consumer products), Bridgestone India. Firestone will compete in the same market that the parent company currently operates in, but is priced about 10 per cent cheaper than Bridgestone.

For the company, this offers an entry into a market that has been largely dominated by Indian players. For instance MRF and Apollo tyres for a new Maruti Suzuki Wagon R are priced at Rs 2,428 and Rs 2,335, respectively. Bridgestone is priced at Rs 3,369 (all prices excluding discounts). Firestone will step in to plug that gap.

It is not just passenger cars that are drawing in new brands. Two-wheelers are a big market, too. Bridgestone has introduced Neurun, an India-specific two-wheeler brand. Surprisingly, this is being marketed without any overt references to the Bridgestone association. Considering that globally, the Japanese company is best known for its two-wheeler tyres - it was formerly the sole supplier to Moto GP - what explains this behaviour?

Experts cite this as an example of how tyre companies are recalibrating their brand strategies to suit consumer behaviour in the Indian market. Brands are looking to position themselves right in the cut-throat two-wheeler tyre market that operates on wafer thin margins. Ceat, MRF, JK Tyres and some low-cost Chinese brands rule this space. As many as 150 million two-wheelers are running on Indian roads providing a huge ready market, which explains Bridgestone's decision to jump in with a low cost offering. Bridgestone has also outsourced the manufacturing to a third party.

The two-wheeler space has seen a number of new brands - Michelin, Balkrishna Tyres and Apollo are all recent entrants. Saraf says the company was merely looking at exploiting a booming market opportunity. "Globally, Bridgestone is known to have multiple brands. It is a huge a business and we wanted to get into it at the earliest. Then considering three key parameters like development cost and easy to access in terms of reliable supplier we found the off-take option to be the best," Saraf added.

In passenger cars, however, companies believe the opportunity lies in budget and premium ends of the market. While Bridgestone has entered the lower end of the market, two years ago, Delhi-based Apollo Tyres had launched its premium Dutch tyre brand Vredestein. It caters to luxury auto brands like Ferrari, Jaguar, Porsche, Mercedes-Benz, Audi to name a few. Satish Sharma, president, Asia Pacific, Middle East & Africa, Apollo Tyres said, "We have introduced a very limited range to a very limited distribution in India. Particular points of appeal have been around design, pattern aesthetics and performance built around ride quality." According to data available with the Automotive Tyre Manufacturers Association passenger car tyre production during the last financial year grew eight per cent in comparison with 2014-15. For tyre companies, this seems to be the right time to speed up.