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Apollo Tyres Limited (APOLLOTYRE) Bought Cooper Tire & Rubber Company (CTB): Will the Tire Industry Grow Again?

The Goodyear Tire & Rubber Company (NASDAQ:GT)

owns more than 53 manufacturing facilities that make and distribute tires for a range of applications. The company has a vast geographical diversification serving Original Equipment Makers (OEMs) and the replacement market, which provides a steady cash flow. The Goodyear Tire & Rubber Company (NASDAQ:GT)’s focus on the emerging markets is encouraging. The company will increase 50% its worldwide capacity by augmenting low-cost production capacities. I support this decision as it will help the companies finances and remain competitive against cheap competition.

However, due to low industry demand, the company is experiencing pricing pressure from OEMs, responsible for 30% of sales. Weaknesses and related production cuts in Europe might push substantial unit volume decreases, which the company is suffering from already.

Conclusion

Apollo Tyres Limited (NSE:APOLLOTYRE) along with Cooper Tire & Rubber Company (NYSE:CTB) will have to demonstrate a solid integration. I believe the new company will succeed and drive positive profits in the next quarters, but it would be prudent to wait a bit and see some positive results in terms of sales and geographic expansion. The impact of the recovery is key.

Titan is in good track. If it manages to maintain its market share or even increase it I would definitely buy this stock.

Although The Goodyear Tire & Rubber Company (NASDAQ:GT) is in a great position realize the market’s better outlook, it has not yet shown better results. Until then, I would wait and monitor it.


Louie Grint has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
Louie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Apollo Tyres Bought Cooper: Will the Tire Industry Grow Again? originally appeared on Fool.com is written by Louie Grint.

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