Eyeing Indian prospects
By Sharad Matade
Yokohama India Pvt Ltd, fully owned Indian subsidiary of Yokohama Rubber, invested Rs300 crore to build up its first plant in India. The company plans to roll out its Yokohama Earth-1 tyres, designed to cater to the comfort and economy segment along with S. Drive.
Currently, Yokohama India owns 2 per cent share in the Indian market. It will continue to import tyres, Takeshi Fujino , Managing Director of Yokohama India, told Polymers & Tyre Asia. The plant, located in Bahadurgarh, Haryana and was inaugurated in February this year and will be operational in the second half of 2014. In the first phase, Yokohama India will produce 2000 tyres a day and production capacity can be scaled to 8000 tyres per day in the next phase.
Explaining the company’s strategy to start manufacturing operations with passenger car tyres and not commercial tyres, Fujino says: “Taking into account the current and future demand of passenger car tyres, we decided to start our manufacturing operations with passenger car tyres. On the other hand, there is more competitiveness in commercial tyres.”
In 2012, the company had said that the Indian market is expected to exceed the expectation of 7 million car sales to grow into the third largest car market in the world. Along with this move, the local tyre market also is expected to grow at a steady pace. Yokohama Rubber plans to proactively take this as a business opportunity and upgrade its business model from sale of imported products to local production/consumption.
“At first, we would like to concentrate on newly launched E400 (Yokohama Earth-1). However, based on a certain experience of the current model from the new factory, we will develop new passenger tyres in future,” Fujino said.
At the current trial production itself, the Yokohama factory has more than 100 direct employees and will soon grow three folds by the end of 2014.
Though the auto sales in India hit record lows in recent times, coupled with the slowing of domestic economy, Takeshi Fujino does not think the timing of opening the plant is not right. “In a long run, auto industry will be growing and our plant expansion of its capacity will be step by step, so we do not think that will be a problem.”
However, entering and establishing the brand in the Indian market, of which around 80% to 90% market share owned by five to six Indian companies, has not been an easy task for Yokohama India, said Fujino. “For the beginning stage, it was difficult time for us since the brand Yokohama had less recognition in India so we needed to start from almost ground zero, however, since demand in India is big, we could capture the market gradually. Also our product quality led to many reference sales,” explains Fujino.
The company has ambitious plans to produce 700,000 tyres annually from its Indian plant and is confident that the Indian market would create enough demand to absorb its ambitious annual capacity. “The demand in India is continuously increasing together with automotive industry growth, so we think we can sell our product from our factory.”
Full article on PTA Aug/Sept issue