Kumho Tire Sees Sales Growth in 2023 Despite Slight Market Downturn

Kumho Tire Sees Sales Growth in 2023 Despite Slight Market Downturn

Kumho believes its four-pronged investment strategy will cement the company as the No. 1 Tier Two tire manufacturer.

Kumho Tire USA overall sales grew 15% in 2023 through October despite an overall market downturn of 1%, revealed Shawn Denlein, Kumho Tire USA president of sales and marketing, during this year’s Kumho Tire Dealer Meeting held in the U.S. Virgin Islands in early December. Nam Hwa (Edmund) Cho, CEO and president of Kumho Tire USA, said this sales growth is due to the support and trust of the company’s dealer base.

“Kumho Tire USA recorded, remarkably, double-digit sales growth this year, even with weak decreased market demand,” Cho said. “I appreciate your continued support.”

“We outpaced the industry every single month,” Denlein added. “From January through April it was by single digits, [but around July] we were up by double digits. We continue to outpace our forecast year-over-year, and by the end of this year we’ll add roughly about 1 million units overall in 2023.”

Denlein said the company’s production capacity has increased to between 62-63 million tires, up from between 55-57 million recorded in the middle of 2022. This is thanks to the company’s Vietnam tire plant increasing production by approximately 5 million tires.

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Shawn Denlein, Kumho Tire USA president of sales and marketing, explained that it is Kumho Tire’s goal to be recognized as the top Tier Two tire brand.

In 2025, Denlein says the company intends to build a “smart factory” in Korea focused on EV and premium OE tires, and Kumho also has plans to add a new plant in Europe “in the near future.”

To date, Kumho Tire has over 9,000 employees, a distribution network involving 180 countries and five R&D centers, with the main location being headquartered in Korea. However, Denlien said the majority of the products being developed for the North American market are generated and led from the R&D center in Akron, Ohio.

Denlein said the company’s boosted profits have allowed it to invest in four major areas: quality products, brand strategy, logistics and profitability.

“I use the analogy ‘four legs of a chair.’ You can’t sit in a chair with three legs on it,” he said. “We see Kumho Tires as a brand that delivers high-quality products at a reasonable price to discerning customers that demand value. From 2024 moving forward, we’re eager to cement ourselves as the top Tier Two manufacturer.

“That’s why brand strategy is so important,” he continued. “Logistics is really important in today’s world, especially when it comes to collaborating with larger customers. Quality of product dovetails with our ability to continuously grow our OE fitments because there’s a certain amount of technology and certain specs that come along with that. Then, being profitable as a company allows us to reinvest in the profitability of the dealers. Our increase in retail, where it sits today, is 14.3% growth. It can be attributed to the fact that we’re a profitable brand. The retailer is not going to choose to put you in their screens if you’re not profitable.”

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Kumho Tire displayed two prototype concept tires for dealers to investigate. The Bon (left) is Kumho Tire’s future non-pneumatic tire concept which the company says draws on the design of natural structures, such as leaves and bones, to maximize structural stability and minimize weight. The Fin-Sread (right) uses LIDAR scanning, active noise cancellation and electro-mechanical functions which are designed to react to the tire’s environment.

Product Strategy/Roadmap

Denlein said consolidating the company’s product lines has been a central strategy since 2018. He said every product that the company sells that had multiple treads is now built on one single tread. Kumho’s all-season TA51a tire, which was once sold as three different product lines, is a great example.

“Today, for a customer to carry [all of those product lines] would be very difficult from an inventory standpoint, from a point of sale standpoint and also from a vehicle application standpoint,” Denlein said. “Now that you have one tread for a TA51a, you can easily see that there’s one tread that’s covering everything, which has been a very good success for us. The other thing is that dealers don’t want to be carrying three different products and they don’t want to carry from precise inventory, especially nowadays because we’ve seen the industry cut down a little bit on the inventory space.”

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Nam Hwa (Edmund) Cho, CEO and president of Kumho Tire USA, credited the company’s tire dealers with Kumho’s successful 2023.

The company also continues to put a large focus on OE business. Denlein said Kumho has 15 OEM partners spanning 54 models and roughly 103 SKUs, making up about 32% of the company’s overall business.

Denlein also revealed several new tire launches anticipated for the coming years. In 2024 Kumho will release the already-announced Solus 4S HA32, the company’s first all-weather tire, launching in January in 26 sizes. Another approximately 19 sizes will be released within the following three or four months.

Kumho is planning several new tire releases in 2025, including a tire that will consolidate the PS71 UHP summer tire and the PA51 UHP all-season tire into one line; an all-weather tire designed for the CUV market; an EV tire; and the RT51, which will be Kumho’s entrance into the R/T tire segment.

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Kumho Tire dealers had plenty of opportunities to mingle against the backdrop of the Carribean Sea.

Challenges

Denlein said Kumho Tire’s primary challenge in 2023 was navigating fill rate difficulties brought about by the COVID-19 pandemic, which continue to affect retailers in the tire industry and beyond. The company’s fill rate in January of 2022 was 34%, and while it grew to closer to 50% in the following months, it wasn’t until around June of 2023 when the percentage “started turning around,” Denlein said. The fill rate then improved to 86.4% in August 2023, and the company is forecasting between 84-86% by the end of the year.

“Some of this can also be attained to when compliancy was down [in our associate dealer program]. If your compliancy is down to a certain degree, your fill rate won’t be as great for your distributors to distribute the product,” Denlein said. “But, the good thing is that it’s moving in the right direction and I don’t foresee it going the other way.”

Looking forward to 2024, Denlein anticipates Kumho’s biggest challenge will be continuing to innovate new ways to stand out in the U.S. marketplace.

“I think that the U.S. is very unique because we have a lot of manufacturers here. We have a lot of various companies selling tires here, whereas in other parts of the world it’s not like that, where you have a plethora of manufacturers coming in from top to bottom,” he said. “So, I think that it’ll be a continuous challenge for us to separate ourselves. That’s why when we say we want to be a Tier Two manufacturer, what I’m really saying is that we have the attributes that we feel a top-tier manufacturer has, and that will separate us from a lot of the competition in the marketplace.”

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Kumho Tire dealers were invited to join company leadership on St. Thomas Island, one of the Virgin Islands in the Caribbean Sea.

Marketing Strategy

Denlein said the company’s target audience from a marketing perspective is Millenials and Gen X. He said one of the most effective ways Kumho has engaged with this audience over the past two years is via Instagram, particularly by posting memes.

“30% [of our target audience] send memes every day. 38% follow meme accounts on social media, and 55% of 13- to 35-year-olds send memes every week,” Denlein said. “This is a very non-traditional way of focusing on this particular segmentation of social media, and we’ve seen a tremendous amount of success. It’s a very efficient and cost-effective way to connect with the audience that we have. Other tire manufacturers just would not get involved in this space, but it’s really helped us.”

Denlein added the company’s influencer strategy has also been highly successful for Kumho. The company worked with one influencer in 2018 and works with around 10 today, primarily on YouTube, Instagram and TikTok. Through these influencers, Denlein said the company has been able to log over 2.1 million engagements with consumers.

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Kumho Tire brought former NBA small forward/shooting guard Bruce Bowen to inspire dealers.

Kumho is also continuing its partnership with the NBA, which Denlein says has the youngest audience of all major North American sports. Kumho began this partnership in 2012 and has two years left on its contract.

“In the 2010s is really where we started to gain some traction on brand awareness, and a lot of that can be looked at from the start of [our partnership with] the NBA. With our age demographic it fits perfectly,” he said. “I think it helps separate ourselves a little bit in a very cluttered and crowded, competitive market space.”

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