If there’s a word to describe what is happening at Hankook Tire North America, it’s “momentum.” The company’s consumer fanbase is growing for its Kinergy and Dynapro lines; Hankook is introducing several new products for both PLT and TBR segments this year; the company is giving its Tennessee factory a major, $1.6 billion upgrade; and both Hankook’s dealer network and OE fitments are experiencing healthy growth.
The thing about momentum is that you have to do something with it or it becomes wasted energy. So, how does Hankook plan to leverage everything it has built to maximize profits for its dealer base and goodwill with consumers?
Rob Williams, Hankook Tire North America president, has some ideas, which altogether he hopes will catapult the tire manufacturer into the top five in tire sales globally by 2030. During this year’s Hankook Partner’s Day Meeting in Riviera Maya, Mexico, Williams sat down with Tire Review to discuss the company’s new products, the segments with the most potential in the tire industry, and both his short- and long-term goals to help Hankook dealers succeed.
David Sickels, Tire Review Editor: Hankook seems to be building a lot of momentum in the all-season and all-weather segments right now. How do you keep the momentum going while ensuring dealer profitability and sustained growth in other product segments?
Rob Williams: The all-weather Kinergy 4S2 H750 has been a big home run for us to complement our product line. But, the Kinergy XP is going to be a game changer, from the long wear, great wet weather traction, and a smooth, quiet ride.
Its predecessor, the Kinergy GT H436, did well for us. We looked at all the features that we could enhance that we think the consumer needed, and the dealer, accordingly, was asking for a tire that would give a few more of those benefits. And then there’s the fact we have a very well-rounded portfolio. We’re very confident that no matter what you’re looking at, whether it be performance with the Ventus or something in the Dynapro family, our iON family, or all the way down to our Vantra ST products, we feel like our portfolio is well-rounded, simple and concise.
During your Partner’s Day meeting you said that you believe the iON may one day be synonymous with “EV tire.” What do you need to do as a company to make that a reality?
Rob Williams: That’s a great question. When we first introduced the iON, it immediately became synonymous with an EV tire. We were debating on how to name it and then we decided to give it its own unique family name, iON, like we have the Kinergy, the Dynapro or the Ventus. Once we chose the iON to be the family of EV tires, the name caught on. We’ve done a lot of Electrify Expo and SEMA events. So, now when people hear the name iON, I think they truly associate it with an EV tire, almost the way a tissue has become a Kleenex or a photocopy became a Xerox. Since we decided to give it a unique name as opposed to calling it the Kinergy iON or the Ventus iON, the name is catching and easy to remember.
Are you seeing fleets here in the States asking for EV commercial tires?
Rob Williams: Minimally. The only example I can give you would be a couple of school bus districts were asking about EV products, but by and large, I would say that until the OE manufacturers of those vehicles put EV tires on, obviously you won’t see it on the aftermarket side much, because not too many people have commercial EVs today that weren’t already equipped with an EV tire from the OE segment.
How about from the autonomous side? It’s a very young technology, but are you working on autonomous vehicle tires?
Rob Williams: Yes and no. Ironically, about two years ago you heard a lot more about it than you do today. I think it’s almost the same with EV tires. There was such a buzz for AI and EV, and while the EV craze has continued, the AI, honestly, hasn’t as much. There have been a lot of fleets out there that are very sensitive to autonomous vehicles for obvious reasons. I can’t say that’s been a conversation of any substance for us in ’23.
You have a lot of new commercial tires debuting this year. Regarding R&D, how much of that is researching new technologies and how much of that is going back to the basics, like looking at your compounding and tread patterns?
Rob Williams: I’d say that’s a great question in the respect that it’s got to be a combination. The Smartline AL52 is a great example. The AL21 has done very well for us, but we realized we want something that’ll wear a little bit longer and a little more evenly. So, we took a lot of the characteristics from the AL21 and then looked at any new technology we could add to it when we built it. With a couple of them, like the Smartline AL50, which is going to be the car hauler tire, that’ll be a totally new tire altogether. So with that one, we went to the drawing board and started from scratch to build a tire and a compound unique to that type of vehicle, because car haulers are totally different with the amount of weight they carry, the weight distribution, and of course the low profile to be able to get under bridges. So, you’re having to combine treadwear with a low-profile tire that will still wear well from a mileage standpoint.
When you decide that you want to get into a vertical like car haulers, does that request typically come from your dealers saying, “Hey, we should really be in here. I’m getting customers asking for it.” Or, is that more that you’re looking at the marketplace and deciding this would be a good place to be?
Rob Williams: Definitely both. The first thing is that you have to always be looking at is market trends and understanding what’s going on in the market. We’re fortunate because, as you see with our dealer network, they’re very attuned to what’s going on in the market. So they often give us input and then we can go look at the market, or we’ll hear from the market and then go ask them, “Hey, do you need a certain type of tire?” I mean, the Dynapro HPX was a great example. They wanted that kind of crossover tire. The HP2 did well for us, but we feel like that’s kind of bridging the gap between a true highway tire and the Dynapro AT2 Extreme, where it slots perfectly in the middle, and that’s what our dealers were asking for. We also saw a big need in the market for that.
You have four new TBR tires coming out this year, plus you’re adding new sizes to the Smartflex DL15+. Was it a strategic decision to debut all of these tires so close to each other?
Rob Williams: Well, I think that during COVID, rolling out new products would’ve probably required us to take away from current production, and with the demand as great as it was through COVID, we were able to spend a lot of time doing the R&D and doing the research. But, we weren’t quite ready to put it on the market yet. So, as the pandemic-driven constraints eased, it allowed us to immediately be able to say, that we’ve been testing this product for a couple of years now and we can take it to the market. We have the capacity to be able to do that. So, I would say it was strategic based on market conditions.
As you pointed out during the Partner’s Day meeting, 2023 wasn’t the greatest year for the commercial segment. How much of that was the supply chain still working itself out? What are your expectations for this year?
Rob Williams: The best answer I can give is that in late ’22, a lot of truck tire inventory made its way in at the same time. Dealers went from having a limited supply to having an overabundance of supply as it all hit. So, as you went into Q1 of ’23, most everybody felt like they had more product than they needed. Clearly, the supply was increasing while the demand was going down, so it was a perfect storm. As we got into the year, inventory peaked in May or June, and now it’s starting to come down to a more traditional level. I feel that the market in Q3 and Q4 was definitely very suppressed, and we expect to see that go up from the low of Q3 and Q4 to a more pre-COVID, traditional level, if you will. So, I think that the market’s back to where it was pre-COVID. We just had two years of unparalleled growth in the industry.
Let’s talk about the Technoring – it’s a fantastic training ground for Hankook. How much do you depend on that as a marketing advantage to show that you’re really putting these tires through the wringer? Do you think your dealers are fully aware of everything that you’re able to accomplish there?
Rob Williams: Not 100%, but that’s why we do events like this. That’s why we love the opportunity to speak with someone like yourself to get that word out. Brooklyn Emery, Hankook brand communications manager, and her team do a great job from a brand awareness standpoint, including opportunities like the Technoring, and our global headquarters is very proactive in supplying information. We’ve taken quite a few dealers over to Korea and let them actually get on the test track firsthand to see just how impressive it is. There are multiple configurations and they’re testing literally different elements at the same time.
We’re taking customers on tours. Each one of them came back and said, “Wow, I’ve never seen anything like it.” It’s really, really impressive. And, when I was there in April, we didn’t have the off-road course open yet. It’s open now by now, and it has mud and dirt and rocks, and it is just beyond comprehension that we can do so much testing on one track. It’s the size of 13 football fields.
Can you discuss your growth strategies for this year, specifically regarding your dealer network?
Rob Williams: 2024 will be a transitional year, especially with the Phase 2 and Phase 3 expansion of the Tennessee Plant, which we expect to benefit from in late ‘25 and early ‘26. So today, in ‘24, from the dealer point of view, we want to continue growing our current dealer network. That’s very important to us. That includes regional dealers and national players.
We also are looking at strategic new growth specifically where we may be lower on market share. We’re going to be very intentional about that type of growth, but we also have to be building the infrastructure for the quantum leap [in production] that we spoke about, whether it be people, processes or technology, to make sure that our dealers have the ability with our customer portal or our learning management system to be able to access all the benefits we offer. So for us, it will be transitional growth here.
You’ve made a few changes to your ONE dealer program. Were those changes based on feedback from your dealers, or was that something that you looked at internally and thought there might be a way to change things around?
Rob Williams: We need to be responsive to the market, listen to the market and understand what’s going on in the market. With our Hankook ONE program, we made some changes to attract some of the smaller ONE dealers with a lower starting bracket. Then, we also made changes on the high end where we lowered some amounts, so some of the larger ONE dealers could get the maximum level of payout. The dealers have asked for that so we can continue to grow our ONE dealer network. I believe we’re up to over 4,000 dealers right now on the ONE program, which is very impressive, and our current dealer base that’s here continues to grow that and support it.
There are pros and cons to having a high percentage of OE fitments. How are you approaching OE business in 2024?
Rob Williams: We will strategically grow some of the current automakers that we’re partnering with. We want to continue to grow with maybe a few other brands within their current portfolio, too. The premium automakers have embraced our product, which we’re very excited about. We value our OE partners on the 45 brands that we’re currently OE on, and we’d love to grow that, but realistically, we do need to have a good balance based on production capabilities. Additionally, the TBR expansion Phase 3 and our Hungary plant will allow us to be a little more aggressive on the OE side, but still be very attentive to our replacement network.
Is there a segment that you believe is full of potential right now that you plan to focus on in the next two or three years?
Rob Williams: Yes, and we’ve spoken of a couple of them. I think that the EV segment is very, very challenging from a growth standpoint. In other words, you hear a lot of people saying it’s going to boom, and other people say that it may not, but either way, you need to be prepared for that growth. And once again, we have a product that is a trendsetter, so we’re excited about that.
The SUV segment very clearly will continue to grow, so we need to make sure we continue to produce new, innovative products, and we’ve done that.
The one that’s still kind of the sleeping giant would be the final-mile delivery segment. Our new Vantra tire I think will help us grow in that segment. I see that one continuing to grow with more and more of the Amazon-type vehicles on the road. A lot of the fleet vehicles are out there.
That might even overlap with EV tires going forward.
Rob Williams: Yeah, absolutely.
What do you see as the biggest challenge that your dealer network is dealing with right now, and how do you feel that Hankook can help address that issue?
Rob Williams: Every dealer has a unique challenge, and I think it’s very clear that there is a lot of uncertainty in the marketplace. For us, we can’t have a one-size-fits-all approach. We have to truly understand what our dealers need in their current markets. That’s where having 50-plus salespeople in the field who are attentive, who know the market, who know the dealers, [is such an asset]. They’ve been able to sit down with them and they’ll ask, “What do you need from Hankook to help you?”
We don’t have a “one solution” for all of them, clearly, but we do have such a strong sales team that can listen and respond. Then, from a leadership standpoint, we’ll take that input and decide dealer by dealer what we need to do.
If a dealer is considering jumping in with Hankook, what would you want them to know about the company from a philosophical standpoint?
Rob Williams: We are one team with our partners, so our dealers are supported, and we go about it with a collaborative approach. Having a very well-rounded product portfolio and products that dealers truly embrace allows us to achieve that. I’ve heard a lot of our dealers over the years, and even last night at dinner, talk about how they’ve been a Hankook dealer with us for a long time and that they believe in our product and how well it performs. Now, if we take that one step further with an even tighter partnership, by being very transparent about what we’re doing at Hankook and being more proactive with them, then they can be transparent with us as to what they need.
