Kumho Tire USA’s annual dealer meeting was different than previous years’ gatherings. Rather than host one big session during its four-day event, the tiremaker hosted several one-on-one sessions with its dealers and distributors.
The change in format for the annual meeting was well received. Many of the dealers and distributors at the event said they enjoyed the one-on-one approach as it gave them personal attention from the tiremaker and specific details on how Kumho can help them in their markets.
Roughly 30 dealers and distributors as well as trade media attended Kumho’s annual dealer meeting in Punta Cana, Dominican Republic, held in early December.
During the long weekend, Tire Review had the chance to have its own one-on-one session with some of Kumho’s leadership. The tiremaker spoke about its new relationship with Yokohama Rubber Co., key personnel changes as well as its Premium Fuel associate dealer program and products rolling out in 2014.
Harry Choi, Kumho Tire USA’s president and CEO, noted that the past year has been difficult but that he is optimistic about success in 2014. Choi said that 2014 will be a turnaround year for not only Kumho in North America, but globally as well.
Moving forward in 2014, Kumho will be refreshing its product offerings, enhancing Premium Fuel program and dealer communications, as well as continuing to build its team.
Choi, who took over the North American market January, is looking to continue building a strong foundation that can spur future growth, he said. Plans will be focused not only on making more profit for Kumho, but for its dealers and distributors, as well.
Sales and Pricing
Among the difficulties Kumho faced in 2013 were sales and personnel changes, Choi said.
Compared to 2012, Kumho’s sales dropped, but an analysis of the details show second half sales actually up year-over-year, Choi said. Part of the problem for low sales in the first half was Kumho’s specialty pricing, he inferred.
“Last year we were trying to sell by price and just move sales by special price actions,” Choi explained. “In the second half of this year we stopped that and we tried to restructure our price list size by size, compared to the competition, and tried to make a consistent pricing policy.”
When Kumho was offering its special pricing, dealers couldn’t have consistency with sales actions because they didn’t know when the special price was going to be gone, Choi said. This created distrust of Kumho’s pricing among its dealers, he said, and the special pricing also created situations where different Kumho dealers to compete against each other on price.
Choi said that going forward Kumho will not just be focused on volume in the market and will offer consistent pricing that allows the dealers to make a profit off Kumho products.
“We would like maintain or have slight increase of sales, and we will focus more on the consistency,” he said. “In that way, even the secondary customers will have it better and our dealers will have better trust with Kumho; at the very least know that they will make the money from Kumho.”
Personnel Changes
The past year has seen several key personnel changes at Kumho, which will bring immense growth opportunity to the company, Choi said.
During its annual meeting weekend, Kumho introduced two new regional vice president of sales – Kirk Papazian and Stephan Clave. Papazian started in September and is working as the tiremaker’s vice president of sales for the Western division. Clave started in November and is the company’s new vice president of sales for the Eastern division.
While during the meeting Choi said that Kumho would soon be hiring a new national sales vice president, at the time he couldn’t reveal the name as the contract being was finalized. Almost exactly a week after Tire Review’s interview, Kumho named John Hagan as its new national sales vice president.
Hagan, who has more than 20 years experience in the industry, most recently worked at Toyo Tire USA Corp., where he was responsible for passenger, light truck and commercial tire sales.
While the tiremaker replaced one of its key positions within weeks, the company has been looking to hire a vice president of marketing for more than a year. The decision to hire someone won’t be rushed, the company cautioned.
“I want to get the right person. I cannot make a hire just for urgency. I don’t want a bad image to go into the market,” Choi said.
Deal With Yokohama
Announced on Nov. 29 was the signing of the memorandum of understanding between Kumho Asiana Group and Yokohama Rubber Co. to discuss technology exchanges and a potential capital alliance.
Choi was able to shed a little more light as to what the partnership could mean for Kumho.
“These days, the price competition is very high. In order to survive, we cannot compete in our current way,” Choi said. “For example, as they did in the past in car manufacturing, car companies shared the frames and they shared the parts. That way they saved a lot in R&D and production costs. So we are trying to develop something in that sense. If we can do the strategic alliance and technical alliance, we can increase our R&D capability.
The alliance, which details should be agreed to by the end of January, could involve the companies owning up to 10% of shares in each other, he said. Choi speculated that maybe in the future the alliance could extend into production, but that isn’t currently being discussed.
The partnership should have no direct effect on tire dealers outside the potential for better products to be introduced into the marketplace, Choi explained.
When asked if the deal would evolve into one company acquiring the other, Choi gave a firm no.
Premium Fuel
Kumho is really focusing on elevating its Premium Fuel program in 2014, according to David Koh, marketing communications manager.
The tiremaker opened a 90-day re-enrollment period for the program on Dec. 9, aimed at creating a more engaged group of dealers, Koh explained.
In 2014, Kumho plans to focus on communication with dealers and making those in the program feel special. With 11 other programs for the dealers to choose from, Kumho really wants to cater to the dealers and have a program that is easy to understand, he said.
One exciting development for the program is the creation of a new inside sales team, Koh said.
“When Harry came on he noticed that we were not communicating with these dealers as much as we should. We hadn’t been really reaching out on the voice to voice level,” he said. “So we created an inside sales team solely to contact dealers.”
The hope is to communicate with the dealers on a daily basis – at the very least quarterly – as well as increase dealer visits, he said.
Another resource for dealers, Kumho is also focusing on its online dealer portal. The portal is to be a one-stop shop to provide dealers with all tire information, training and marketing materials. Additionally, the portal will have real-time tracking for dealers on their Premium Fuel sales.
“One of the issues Premium Fuel dealers face is having multiple brands, and he doesn’t know exactly where he is on each of those brands,” Koh said. “Our distributors do a good job, we’re just aiding in that process.”
The real-time data will also allow Kumho to help dealers who are near the next bonus stage get more money at the end of the quarter, he said.
Another way Kumho is enhancing its dealer program is by creating a dealer advisory board in 2014. The board will provide Kumho with advise and help steer the tiremaker in the right direction, Koh said. The plan is for the board to meet quarterly starting in the second quarter of 2014.
The tiremaker is also working on new dealer kits and enhancing its program materials.
New Products
Over the next two years, Kumho will be introducing several new tires into the North American market. The new product offerings will update the current line as well as be more focused to the needs of the North American market, Choi said.
The first tire to be release will be the Solus TA31 in the first quarter. The TA31 is a high performance all-season tire that is currently OE on the 2014 Kia Soul. Kumho plans to offer additional sizing options for the tire later in the year, it said.
While the tiremaker has not set specific release dates, Kumho will also introduce the Road Venture AT51 and Ecsta PA71 in the fourth quarter and the Solus TA11 will launch in early 2015.
The AT 51 is an all-terrain tire that replaces the KL78. The PA71 is a ultra-high performance all-season touring tire and replaces the KU27. The TA11 is broad line touring all-season tire that replaces the KR21.
The tiremaker will also be expanding the sizes of its Ecsta PA31 in the first quarter, it said.
