Apollo Confirms India-Hungary Supply Shift as Recovery Slows

Apollo Tyres has confirmed that its revised passenger car tyre supply arrangement for Europe is operating, with smaller sizes sourced from India and higher-end products manufactured in Hungary, although the group's wider European recovery is taking longer than expected.

The manufacturer reported a 12% year-on-year decline in European revenue to €157 million for the July to September 2026 quarter, citing weaker truck and agricultural tyre demand alongside supply disruption following the closure of its Enschede factory in the Netherlands.

During the company's 5 November earnings call, chief financial officer Ravi Kumar Shingari outlined progress with the manufacturing reorganisation and acknowledged that restoring European profitability was proving slower than initially anticipated.

Passenger Tyre Production Shift Under Way

Apollo's revised production model concentrates higher-end passenger car tyres at its Gyöngyöshalász factory in Hungary, with smaller rim diameters supplied from India.

Responding to questions about manufacturing readiness ahead of the winter tyre season, Shingari confirmed that the passenger tyre allocation was already being implemented.

"The smaller sizes will be supplied from India and the high-end tyres will be done from Hungary. So that plan is in motion," he told analysts.

The arrangement is not a newly announced strategy.

As Tyre News Media reported in August, Apollo had already identified India as the destination for lower-end 14- and 15-inch passenger tyre production, while Hungary was taking on a greater share of higher-value manufacturing following Enschede's closure.

The November update confirms that the passenger tyre arrangement is progressing, while highlighting the outstanding challenges elsewhere in Apollo's European operations.

European Revenue Falls Despite Passenger Tyre Growth

Apollo's European business recorded revenue of €157 million for the second quarter of its 2026-27 financial year, down 12% compared with the corresponding period last year.

The region delivered an EBITDA margin of 10.3%.

Performance differed considerably between tyre categories.

According to management, European Vredestein passenger car and light truck tyre volumes increased by approximately 5% year on year. Apollo-branded volumes in the same category grew by more than 50%, although the company did not disclose the starting volume.

These gains contrasted with weaker agricultural and truck tyre performance, where demand conditions and the disruption associated with relocating production affected sales.

Group-wide revenue nevertheless increased by 17% to INR 79.68 billion (€724.54 million at Apollo's reported conversion rate), supported by stronger performance in India.

The results underline a distinction within Apollo's European business: passenger tyre volumes are growing, but the wider manufacturing transition continues to affect revenue and profitability.

Agricultural and Truck Tyre Supply Remains a Challenge

Operations at Enschede ended on 30 June 2026, following Apollo's decision to close the Dutch manufacturing site and transfer production elsewhere.

The closure formed part of a restructuring designed to reduce exposure to higher manufacturing costs and consolidate production within the group's remaining facilities.

Apollo has also been relocating truck and bus radial tyre manufacturing from Hungary to India, a separate programme from the passenger tyre allocation.

Agricultural and off-highway products present additional challenges because of their more specialised manufacturing requirements.

TNM previously reported Apollo's decision to source selected agricultural tyres from external manufacturing partners rather than recreate all of Enschede's specialist capacity at another company-owned factory.

During the November call, Shingari identified agricultural and off-highway tyre supply as an important remaining priority, with stabilisation expected during the next financial year.

He also confirmed that Hungary is now Apollo's only operating tyre factory in Europe.

Although production has ended at Enschede, some costs associated with dismantling equipment and completing the closure process are expected to continue. Apollo recognised approximately €2.3 million in exceptional European charges during the quarter, largely associated with remaining employee-related matters.

European Recovery Taking Longer Than Expected

Apollo acknowledged that its European margin recovery has been delayed by a combination of subdued market conditions and production transition difficulties.

Management expects revenue and volumes to improve as the revised supply arrangements become established, with the current quarter anticipated to show progress against internal budgets.

However, the company indicated that restoring stability in agricultural and off-highway tyre supply would extend into the next financial year, FY2027-28, which begins in April 2027.

Apollo continues to target European operating margins in the high teens over the medium term, but this remains an objective rather than a forecast for a specific quarter.

For UK and European tyre distributors, the practical test will be whether Apollo can maintain passenger tyre availability while restoring dependable supply across its specialist and commercial ranges.

The change also makes manufacturing origin increasingly relevant across the portfolio, with different products supplied from Hungary, India and external manufacturing partners.

Apollo has not established a specific effect on UK tyre prices or individual dealer delivery times.

The next indication of progress will come from European sales volumes, product availability and margins as the company completes its manufacturing transition.

Source: Apollo Tyres Q2 FY2027 analyst call transcript, 5 November 2026, published 6 November 2026.

‍

‍

Tags: Apollo Tyres, Apollo Europe, Vredestein, Apollo Hungary, Enschede closure, India tyre production, European tyre manufacturing, tyre supply chain, agricultural tyres, European tyre market

‍