Kumho Looks to Get Back on Track With New Target, Message

After posting 30%-plus annual sales gains for the last few years, one had to wonder what could slow Kumho Tire USA Inc.’s growth. As it turns out, it was its own parent company.

With new ownership and growing market opportunities in Asia, Kumho Tire Co. reduced tire shipments to North America in favor of selling them in the burgeoning China market. If it had been able to maintain its previous allocation levels, Kumho Ture USA likely would have enjoyed another year of sizeable growth, according to company officials.

Still, the Fontana, Calif.-based company posted 2003 sales of $305 million, off 8% versus 2002, and expects to turn $340 million in sales this year, according to Dave Hudrlik, Kumho’s vice president of sales. Most of its sales decrease came in passenger tires, where Kumho was down 20% versus 2002.

Hudrlik said the parent firm is increasing production capacity in both China and South Korea, including the addition of a fully automated modular tire production system this past October. Located near Hyundai and Kia plants southwest of Seoul, the robotic system ®“ called APU (Automated Production Unit) ®“ is running at nearly its full two million tires per year capacity already, said Hudrlik, but those units are earmarked for OE sales.

The allocation shift was expected, Hudrlik said, but not to the degree that occurred. New majority owner of Kumho Tire Co., South Korea’s Military Mutual Aid Association, wants to see profitable growth. With tire demand in China well exceeding that nation’s capacity, the parent company sees tremendous profit potential in China.

Capacity availability should loosen this year, Hudrlik said. At the same time, the U.S. arm is altering its market focus, placing even greater emphasis on the ultra high performance market, where officials see a clear opportunity for profitable growth on these shores.

Retaining its grassroots racing emphasis in both SCCA and CORE series, Kumho plans to increase its focus on a target 18-34 male audience. The company is dropping its familiar "Way to Go" tagline in favor of "Race Proven Performance," and is looking to boost its share of the 55-series and lower UHP market segment.

Mike Leverington, Kumho’s marketing director, said marketing efforts will "support dealers at all levels," but will reach out to a slightly different demographic and focus on building "future brand loyalty." The marketing push will include major sweepstakes events as in the past, but will add "lifestyle marketing" aspects, such as its sponsorship of ESPN’s Winter and Summer X Games, participation with the YouthAIDS charity, and commercials on ESPN, ESPN2, MTV, ABC, Speed Channel, and Fox’s "Best Damn Sports Show Period."

Enthusiast magazines and car clubs are also key targets, and dealers will have access to tagable TV and radio spots for their local markets, Leverington said.

Another aspect of its renewed UHP push is the launch of the Ecsta ASX, an all-season UHP radial that made its debut at the recent Winter X Games in Aspen, Colo. With an asymmetrical three-rib tread design and "detailed sidewall graphics," the Ecsta ASX is now available in 21 sizes of 16 through 18 inches with V and W speed ratings. Seventeen other sizes will be added later this year.

Kumho is also adding a number of new sizes to its Ecsta STX line, and is adding 10 sizes to its Ecsta V710 performance line.