After a Record Year, Hankook Meets New Challenges Head-On
Hankook Tire America Corp. pulled out all the stops and treated 80 of its top dealers to a taste of paradise at Cove Atlantis in Paradise Island, Bahamas, for the company’s annual dealer sales meeting. Though 2007 was a rewarding year financially for Hankook, the company is still working to improve in 2008, President Greg Pae said.
Tire sales and marketshare were up last year, he noted, but in order for the tiremaker to “grow forward” in the replacement business, Hankook must overcome certain supply/fill rate issues. Pae assured dealers the company would work harder than ever to better supply its products.
In 2007, Hankook’s overall 9.5% sales increase over 2006 marked a new high point in North America sales of $751 million. This effort was a direct result of the support Hankook received from its dealer network, said Pae. Hankook will invest more than ever in manufacturing capacity, product technology, development of new sizes and patterns, and brand building marketing programs in order to drive consumers to dealers, he said.
By 2010, Hankook estimates it will have total annual capacity exceeding 73 million tires. Pae said he personally expects to reach that by the end of this year – two years ahead of schedule.
In a one-on-one interview with Tire Review, Pae explained that as important as building capacity and unit production is to Hankook, “it is equally important to build quality into every product in order to satisfy our customers.”
Hankook said it annually invests approximately 5% of total revenue in R&D, which Pae believes is proportionally more than any of its competitors.
“Our pursuit of OE business does not and cannot disrupt our replacement market business,” he said. “Right now we enjoy global OE fitments with Ford, GM, Hyundai, Kia, Volkswagen, Audi, International Truck and others, including our first fitment with Chrysler. These fitments serve to validate Hankook’s commitment to quality, and eventually bring new customers to our dealers for replacement business.”
Joel Caplan, owner/partner of BC Tire in Piscataway, N.J., said he sees his relationship with Hankook as a “win/win business partnership. They provide us with a high quality, fairly priced product and we provide a strong selling effort, which combines into a winning proposition for Hankook, BC Tire and our customers. We see that the product branding efforts at Hankook are steadily improving based on our customers’ continued acceptance level of the product.”
Alpio Barbara, president of Redwood General Tire, Redwood City, Calif. and a finalist in Tire Review’s 2007 Top Shop Awards, was very positive about Hankook’s product quality.
“My customers tell me ‘I’m looking for a quality tire that is reasonably priced,’ even though the name ‘Hankook’ isn’t on the tip of their tongues and they haven’t experienced the tire’s handling and performance ability,” Barbara said. “I ask them, ‘In all the years you’ve been buying tires from me, have I ever steered you wrong? Try the tire and let’s see what you think.’”
Year after year, he continues to sell more Hankook tires, including just under $1 million worth in 2007. In fact, Barbara accepted an award on behalf of the Independent Tire Dealer Group, a buying group on the west coast, from Hankook for being one of two $10 million producing organizations at the meeting this year.
In short, the takeaway from this year’s meeting was for Hankook management to sincerely recognize the need to better fill the dealer pipeline with product in 2008, since dealers and customers are already highly satisfied with the quality of Hankook tires.
