BCCI deal to make Apollo Tyres one of the biggest auto ad spenders

Additional spending on brand promotion after becoming the lead sponsor for the Indian cricket team could weigh on margins and profits in short run

Its sponsorship deal with the Board of Control for Cricket in India (BCCI) will make Apollo Tyres one of the biggest ad spenders in the automotive industry, rivalling many vehicle makers.

 

Apollo Tyres’ advertisement expenditure is high compared to that of its domestic peers.

 

Additional spending on brand promotion after becoming the lead sponsor for the Indian cricket team could weigh on its margins and profits at least in the short run.

 

Early this month Apollo Tyres signed a deal with the BCCI to become the new lead sponsor of Team India for the next 30 months for ₹575 crore.

 

The company in FY25 spent a consolidated ₹655 crore on advertising and brand promotion.

 

This was as much as the combined advertising expenditures of its three other domestic rivals -- MRF, Ceat, and JK Tyres. These three companies together spent around ₹661 crore in FY25.

 

Apollo Tyres’ advertisement spend was nearly 2.5 per cent of its net sales last financial year, much higher than that of its other domestic peers and behind only Balkrishna Industries, which spent 4.2 per cent of its net sales in FY25.

 

However, it gets most of its revenue from off-road, mining, and farm tyres, and has a limited presence in automotive tyres.

 

In comparison, Apollo Tyres’ revenues come from manufacturing and selling tyres for commercial vehicles and passenger cars, with a small contribution from two-wheeler tyres.

 

It’s a similar story for its other domestic peers such as MRF, Ceat, and JK Tyres.

 

MRF, the country’s largest tyre maker by revenue, in FY25 spent ₹190 crore on advertising, accounting for just 0.7 per cent of its net sales.

 

Ceat spent ₹284 crore in FY25, amounting to 2.1 per cent of its net sales.

 

JK Tyres spent around ₹188 crore, accounting for 1.3 per cent of its net sales.

 

Also, Apollo Tyres’ advertisement spend is high compared to many vehicle makers in the country.

 

In FY25 the tyre maker spent more on advertising than vehicle makers such as Bajaj Auto, Eicher Motors, and Tata Motors and slightly less than Hyundai Motors India. (See the adjoining charts.)

 

The company says the sponsorship deal with the BCCI will pay for itself by way of higher sales and an incremental rise in operating margins.

 

“Our association Team India will help us to gain market share especially in rural India and smaller towns where cricket remains the most watched and followed sport. Vehicle ownership is growing at a faster pace in these parts of the country than in big urban centres, giving us an opportunity to strengthen our brand presence in these markets,” Neeraj Kanwar, vice-chairman and managing director, told Business Standard.

 

According to Kanwar, the sponsorship will allow Apollo Tyres to grow its presence in the United States market for truck tyres.

 

Analysts, however, say this will have a negative impact on Apollo Tyres’ margins at least in the short run.

 

“Marketing and brand building are a long-term exercise and gains accrue over a period of time … It would be worthwhile if it allows Apollo Tyres to gain market share in due course,” said G Chokkalingam, founder and chief executive officer, Equinomics Research.

 

Analysts at JM Financial wrote: “Apollo Tyres lost market share in the passenger vehicle Original Equipment (OE) segment in 1QFY26. In the replacement segment, while its held ground in the truck and bus radial segment, the company lost market share in the passenger car radial segment.”

 

According to Chokkalingam, the deal with the BCCI is an effort by the company to regain the initiative from its rivals, though an expensive one.