When it comes to beautiful locations for a meeting, Puerto Vallarta, Mexico, is hard to beat. After the year Hankook Tire America Corp. just had, holding its annual Partner Days event at Riviera Nayarit there was a real treat for the 100 or so dealers in attendance.
Hankook Tire America President and COO Soo II Lee opened the late-January meeting by thanking his dealers for their efforts in making 2010 a record breaker for the South Korean company. “Our global sales compared to those of the year before increased by 14% in quantity, hitting 81 million tires, and by 23% in sales dollars, reaching $4.7 billion.
“Hankook in the U.S. and Canada combined recorded sales of 12.6 million tires, totaling $1 billion a growth rate of 21%,” he said.
The global results, Lee said, would be enough to propel Hankook to No. 7 among the list of largest tire companies. The records were achieved as Hankook began celebrating two anniversaries in 2011: 70 years in business and 30 years in the U.S.
Lee noted that the positive gain in the automotive industry is welcome news on both the OE and replacement tire fronts, and that he feels consumers have a better understanding of the importance of a well-engineered and well-made tire, which he feels offers Hankook unique opportunities and challenges at the same time.
During the main business session of the meeting, various Hankook Tire America executives discussed macro-economic issues, as well as the state of the industry and company.
Overall for 2011, the tiremaker expects modest growth of 2% in consumer tire shipments, while the commercial side primarily in medium truck tires will grow at a more aggressive 5%-6% rate for the year.
Over the last year, Hankook has worked hard at building stronger and more efficient relationships with dealers on both the consumer tire and commercial tire sides. The value of the relationship and how it holds up in tough times, the company noted, is its strength.
Hankook is pushing more of the relationship-building down to the local level and depending on the dealer’s segment focus to help the company better align with its dealers.
Referring to supply issues that plagued Hankook and every other tire company in North America last year, the company sees it as one of those difficult patches that are unique to the economic downturn. It will not be a chronic problem, executives assured, but was a bump in the road that Hankook will work through to “form and forge” stronger relationships with dealers.
Helping expand those relationships, the company noted, also means a slate of premium new products and a stronger focus on building consumer familiarity for the Hankook brand.
Hankook will continue to provide premium products that will compete favorably against any brand in the industry, the executives said, and the tiremaker will continue to look for opportunities to have its premium products tested head-to-head against the “best-known brands in the industry to prove quality and performance.”
Toward that end, Bill Bainbridge, director of brand communications, revealed three new tires that Hankook will roll out this year.
Optimo H426, an all-season grand touring performance tire, has had OE fitment for the last two years and will be available in the second quarter in 28 popular replacement sizes ranging from 14- to 18-inch wheel diameters.
Dynapro HT will replace the Dynapro AS, and is an all-season performance light truck/SUV tire. Offering improved snow traction, longer treadwear and lower rolling resistance vs. the AS, the Dynapro HT will be available in the third quarter in 21 P-metric and 10 LT-metric sizes ranging from 16- to 18-inch wheel diameters.
Hankook’s “green”tire the Enfren eco will be rolled out in the fourth quarter in five initial 15- and 16-inch sizes. Designed for hybrid and fuel-efficient vehicles, the tire features a high silica content synthetic rubber tread compound optimized for reduced rolling resistance, according to Hankook.
In addition, the Ventus V2 concept all-season high performance tire launched in 2010 is now available in 22 sizes.
Hankook’s third foundational element is the dealer. “We can have the best products and services, and awesome brand-building investments, but it means nothing without having a great group of dealers representing the Hankook brand in the marketplace.”
To help those dealers, going into 2011, Hankook executives noted, the company will “significantly increase” its brand-building investment a 75% jump, though precise figures weren’t announced.
Bainbridge outlined an aggressive plan for the year, including increased spending on sports arena signage, more spending on primetime television, a continued presence in the key sports and lifestyle print media, more one-off consumer exposure events like the tire-shaped billboard in Times Square, and improved point-of-sale merchandising.
Regarding its supply situation, Hankook executives pointed to plans to boost capacity. Hankook has committed more than $1.3 billion to build new tire factories in China (opening in 2012) and Indonesia (opening in 2014). In fact, 50% of the production from the Indonesia plant will be dedicated to the U.S. and Canada, said Lee.
“Such investments would enable us to better supply this region,” he said. “Upon completion, these new investments will boost the company’s global capacity by 15% to 100 million units.
Lee also noted, “in the long run, we will need a factory on the American continent.”
By and large, dealers in attendance were impressed. Kelly Burt, senior operations manager with Tire Wholesalers in Troy, Mich., said Hankook is “very easy to deal with as they have gone out of their way to work with us in any way they can. Our customers like the product and we look forward to continued growth with Hankook up here in Michigan.”