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Nexen Takes It Up a Gear

(Clacton, U.K./Tyres & Accessories) No expense was spared when it came to the construction and presentation of the Nexen stand – both signs that Nexen wants to be to seen to be taking its image “up a gear.”

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Tyres & Accessories met with managing director, David Sul, and found out about the sales growth that is propelling the company’s promotional drive.

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The scale of Nexen’s Essen stand, placed near the centre of Hall 3, was probably the most surprising thing about the exhibit. Not only was it just seconds away from most of the premium manufacturers, but the large stand featured a Nexen-shod Ferrari 430 Spider – a move that can only be interpreted as a suggestion that the company has increasingly high aspirations. (Interestingly, Hankook’s stand also featured a Ferrari 430.)

Furthermore, Nexen had a similarly large stand at last November’s SEMA show, signaling that the company’s large-scale exhibition presence was not a one-off, but rather part of an ongoing strategy.

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Nexen launched four new tyres at the Essen show – the CP641, the N6000, an ultra-high performance winter tyre and an as yet unnamed asymmetric summer tyre. The fact that the tyres don’t yet have a name is testament to just how new these products are. All in all, the news of new products is said to be making dealers “very happy.”

Sales Development
Following Nexen’s announcement that it will build a 10 million-unit Chinese factory and other expansion plans, it is clear that the company has set its sights on strengthening its international presence. In Europe, this means expanding its after-sales staff at its EUHQ in Frankfurt. This includes an appointment in the technical department, with the new staff member bringing 30 years of technical experience to the company.

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Nexen reports that its European market sales have soared from 2.5 million units in 2004 to 3.3 million in 2005 (a 32 per cent increase) before reaching a predicted peak of 3.7 million units for 2006 (up 12 per cent). Broken down this means that the company sold 1.25 million tyres in Germany last year and roughly half a million in the UK. In 2006 the German market total is expected to increase 20 per cent to around 1.5 million units, while the UK division is expected to increase by 50 per cent to around 750,000 units.

According to David Sul, there are clear reasons for the rapidly improving sales performance. Sales are said to have improved relative to the range of products, sales and technical support on offer. In other circumstances, a predicted 12 per cent EU-wide sales increase between 2005 and 2006 would be good enough, but according to Sul, dealers still want more. And the combination of increased after-sales support, new products and additional production capacity in China is seen as the way to do this.

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“Sales cannot develop by themselves,” Mr Sul commented. Instead, there has been a big push to improve and develop more of the most popular and profitable sizes.

The second reason Nexen is increasing headcount within its European staff is because the company plans to increase its position with regard to the OE business. On this subject, as Tyres & Accessories revealed earlier this year, Nexen is continuing to develop relations with a large European OE customer in addition the South Korean companies it already supplies like – Hyundai, GM Daewoo, Kia and Ssangyong.

For the next step, the company reports that it is also developing its logistic performance in and around southern Europe and plans to concentrate on entering the dealer service in countries like Italy and Spain. At the same time, additional sales, support and marketing offices are planned in New York (US) this year and Toronto, Panama and Japan in 2007.

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In the US, Nexen entered into a unique partnership with Lexani wheels to distribute Lexani-branded tyres with some wheel purchases. Globally, Nexen and Roadstone will continue to be marketed as completely different products, the Lexani brand, however, is a US-only project.

Lexani is a great way of making the most of the US’ number-one wheel brand, the managing director continued. Hip-hop stars and Hollywood actors often roll on Lexani wheels, and exposure in this way helps the company step up the strategic ladder by pumping up brand equity. Details of how and if the company will expand in this area have not been disclosed.

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