With a recovery in demand on the horizon, Nexen Tire executives say the company is poised for growth. Over the last few years, major changes have taken place to set the South Korean tiremaker on this path: First, the opening of its tech center in Richfield, Ohio, in 2019. Then, hiring new blood to strengthen its team and moving its HQ to Ohio. Add to that lunching a mix of tires in popular segments, and most importantly, no recalls in its history in the US, and Nexen executives believe that the company is ready to support its dealers in any way they need.
“We are fully populated in the whole United States,” says John Hagan, executive vice president for Nexen Tire America. “With the supply chain issues behind us, hopefully, we now are aligned with our customer’s expectations.”
To get an update on the business and what to expect in the future, we caught up with Nexen Tire executives last year during the company’s Nexen Adventure Dealer Trip in Banff, Canada. Take a look at coverage from that here. Below, hear what Brian Han, CEO of Nexen Tire America; Reon Ky Kim, vice president of marketing; John Hagan, executive vice president of sales; and Jason Yard, director of marketing, had to say about how the company is poised for future growth.
Madeleine Winer, Editor, Tire Review: There has been a lot of transitions within Nexen Tire North America. You mentioned this led to the birth of a new culture. Can you describe what that means and what this looks like for Nexen?
Hagan: When we moved from California, we had a good system, but when we went into Richfield, it gave us the opportunity to bring younger, vibrant people into the organization. We strengthened our team and increased a lot of the support functions in general, which translates to our dealers getting better response times, better communication, improved reporting, transparency… We give our dealers monthly reports to show their activity and where they are compared to where we want them to be. This support is pretty much a report card, so we’re able to do it quicker and faster.
MW: You also added a new CRM system, correct?
Hagan: Yep. Now, we’re faster to the market…we can see at high levels what’s going on with different customers in different parts of the country. It gives us the ability to react quickly because our sales team, of course, is in the weeds. They should be. But we can see trends and directions that we use to strategize every day on how we can be faster and better in the market.
We do our damnedest to turn around any requests from our dealers within 24 hours. Some are more complex than others, so we’re not 100% successful, but at least it is a goal that we strive for. If something comes up from the field, we collaborate and then we turn around and make a decision… Our customers are happy that we’re getting back to them right away on what we can do.
MW: Talking about supply chain, I wanted to ask about fill rates. How have you all seen those fluctuate compared to early in the pandemic to now?
Hagan: Ever since I joined Nexen, we always strived for 95% plus or minus two or three a given time. And then when the pandemic came, we still weren’t at 90, 95, but we were higher than the rest of our competitors. We were doing very well until the supply chain ran into shipping issues, container issues, and then we dropped. But now that it has passed us, we’re now building that fill rate back up and our target is to get back up to where our dealers expect us to be. We are doing everything in our power to get back up to the 95 percent range.
MW: What are some of those things you’re doing to get up to that range? I know Nexen opened up a manufacturing facility in the Czech Republic around 2019/2020.
Hagan: For the US, Korea provides 100% of our supply. The Czech plant is for OEM replacement in the European market.
Yard: The Czech plant opened up more capacity for Korea to help supply the US market. It took the strain off Korea [for the European market]. So, tires produced in Europe are sold in Europe rather than coming from Korea, giving Korea more capacity to supply in the US.
MW: Going into 2023, how are you all seeing demand among your dealers?
Hagan: We’re seeing and hoping that the demand will increase. If you look at Q2 and Q3 last year, there were no tires, and then there was a massive influx of tires. So, we asked: Is demand slow due to the economy and people trying to save money? Or is it because it is relative to the number of tires that each dealer got pounded with over the last three months? There’s a lot of speculation, but it’s a little bit of both. It should recover in 2023. That’s a positive sign.
MW: There have been a lot of price increases in the market. Can you take me through your pricing strategy and what the future looks like for Nexen?
Hagan: Nexen’s overall strategy has always been just to follow the market. We don’t want to be a leader in price increases, nor do we want to be a leader in price drops. If you go look at the first eight months [of 2022], everybody was increasing prices and we were following along. Now you have, with the demand being soft, a lot of Tier 3 and Tier 4 taking away surcharges in their container business. Not that the freight has changed at all, but they’re just wanting to move volume. So, we’re getting some of that pressure through all the other tiers on what’s going to happen next. I still think we’ll go into this year and maintain the overall prices, but there will be some challenges here and there going forward.
MW: Nexen recently launched the Roadian ATX. With the light truck market getting more segmented, how are you reading the light truck market?
Hagan: In the future, we’re definitely looking at the other niches, but really our focus is the Roadian HTX2 and the ATX. The HTX2 is our first all-weather tire. When we launched it, it did a lot better than we anticipated. Even with the slow demand and the overall flooding of tires in the market, we’ve been able to do pretty well on both tires so far.
Yard: Some changes will come with the different sizes as well. In the ATX, we’ll be coming out with more sizes in the next several months for it to fit more CUV and SUV sizes. We’re expanding both tires as far as sizes go. We have our bases covered with the HTX, the ATX, MT and even the GTX for SUVs. And, they’ve all been launched in the last three years, so they still have new technology.
Kim: The CUV/SUV and truck segment is increasing every year in the US. Nexen Tire America and Nexen Tire Korea, we are focusing on developing these categories mainly for the USA market… In our five-to-10-year plan, we have some additional plans for this segment.
MW: Nexen’s OE business has also grown in the US exponentially. How does this play a role in your strategic growth plan going forward?
Hagan: It’s key. I mean, at the end of the day, if you look at what our OE fitments are specifically with Stellantis and some of the Korean brands like Hyundai and Kia… a lot of the new ones that we gained three, four years ago are now hitting the replacement market. If you go back and look at where our growth has been from an OE chart, we’ll start seeing those first replacements this year in good numbers. We’ve seen some already, but it’ll really transpire into good replacement numbers next year and the year after. Our OE fitments have also helped with brand imaging and marketing capabilities.
MW: I also wanted to ask about how you all are viewing the EV tire market. We’ve seen tire manufacturers put out EV-specific tires. What do you want dealers to know about how Nexen is addressing tires for EVs?
Hagan: We’ve been working on EVs for years. We started working with Canoo out on the West Coast, for example, years ago when they were just starting up. We are also looking at many different vehicle platforms, and we have a lot of projects in the works. What we’re going to do is take a particular tread pattern and create a subset of EV tires that complement our current product line, which helps in brand marketing and complexity. Our dealers have to deal with all this size proliferation in the market. It helps them go to one pattern, one product, and they have the confidence of Nexen to sell it.
Any of the projects that we’re working on in the EV market, we’re working closely with the OE manufacturers. We’re meeting the weight requirements of the performance characteristics, low rolling resistant targets, etc.
MW: Geographically, in which areas does Nexen want to grow? I know the company has business in Canada as well, but how do you see your footprint expanding going forward?
Hagan: Our growth has been in the works for the last three to four years, but it really came to fruition last year where we started getting traction with improving our distribution network throughout the United States. That’s also with the help of some of our larger distributors who have acquired other companies and have brought them into the mold… So, if they weren’t carrying Nexen, now they are. Some elements like that have allowed us to grow at a very good clip.
Over the last couple of years, since we have grown our distribution, we are fully populated in the whole United States. Where we need to improve on is increasing our share of accounts with our dealers so that we are able to expand. If you look at the past, the dealers were ready, and we weren’t. With the supply chain issues behind us, hopefully, we now are aligned with our customers’ expectations. So, we just have to work on that and do a better job of executing.
MW: Going off of that… when a dealer or service advisor is at the counter, how do you all want them to think about Nexen and how do you want dealers selling the product?
Hagan: Definitely the warranties and the value proposition that Nexen gives them versus our competitors. Us having no recalls in the US goes a long way. Also, just the overall value of what our tire can do compared to our competitors. They can be confident selling it and know that it won’t come back.
If you look at the typical shop owner, they want the ease of selling it to the consumer, mounting and balancing with no issues, very little weights to balance—Nexen hits all those.
MW: I know you all launched a new slogan in 2021: “We got you.” So I’m curious, how has that been received here and what does that mean to you all?
Yard: I think it speaks to the trust and the confidence that dealers and customers have in our product. We get feedback, and one of those things we hear the most is Nexen tires stay sold. There’s a confidence when dealers bring Nexen in that they’re going to sell them and stay sold because the quality is there. And if for some reason there is an issue, Nexen stands behind it. That goes right into the phrase, “We got you” no matter what.
From the dealer standpoint, it stems from the birth of how we communicate to dealers that we got you covered on all bases. That’s what kicked it off and got us going, and then that mushroomed into a global campaign.