During a relatively down tire market domestically, Kumho Tire U.S.A. Inc. saw its U.S. tire sales nearly double from 2000 to 2002, going to $327 million from $167 million.
And officials at the subsidiary of South Korea's Kumho Industrial Co. Ltd. clearly feel the firm's involvement in racing has been the prime driver in Kumho's emergence, both during that time span and over the past 10 years, as a viable player in the U.S. tire market.
``You race to build the brand,'' said Guy Edington, managing director of the Kumho America Technical Center in Akron, who was a speaker at the recent Clemson University Tire Industry Conference in Hilton Head.
Mr. Edington recalls 1993, when Kumho was what he called the ``Rodney Dangerfield of U.S. tire suppliers.'' Kumho Tire U.S.A. then was a $60 million company that sold 600,000 passenger tires to wholesalers and another 200,000 truck tires. While the ultra-high performance market focused on 16- and 17-inch V- and Z-rated tires, Kumho's top offering was a 15-inch, H-rated tire.
``We had little distribution, we sold by containers only, had no image and no brand awareness,'' he said. ``Nobody knew us, nobody cared, and our profit margins were terrible.''
Then a chance meeting in South Korea between an engineer there on business from the Kumho America Technical Center-in operation for about a year at the time-with Kumho Chairman S.Y. Park changed the U.S. subsidiary's fortunes for good. Mr. Park asked the engineer, ``How do we improve Kumho's brand image in the U.S.?'' The engineer's response: ``Get involved in racing.''
Like Mr. Edington, the engineer had come to Kumho from General Tire, and had seen the positive impact a racing program had on General in the 1980s.
Kumho had a relatively flat organizational structure, so if you caught the right ear, a lot could be accomplished in a hurry, Mr. Edington said. ``There was no business plan. No nothing. We just got involved in racing.''
Technical center employees recommended choosing an open racing series that involved competing against others. They didn't want to be a sole supplier as a specified tire in a series, because that basically meant Kumho would be racing against itself. ``But when you're in a competition, if you are successful, you raise your image,'' he said.
So Kumho became involved in the Sports Car Club of America Showroom Stock series, with five classes using legal street tires and an affordable ``six-figure budget,'' according to Mr. Edington. The SCCA seemed to be the best bet because it was a grassroots racing series with membership exceeding 60,000 who closely mirrored Kumho's target audience of males age 25-49.
The members also were affluent, with 34 percent making more than $100,000 a year and another 13 percent making $80,000 to $100,000. Eighty-eight percent had purchased tires in the past two years, and 60 percent said they planned to buy tires in the next year.
Kumho designed and tested a Victoracer V700 prototype and competed in four national level races, earning a third-place podium finish at the Valvoline Run-Offs. ``We were on our way,'' Mr. Edington said. ``We proved we could design and provide a worthy competition tire.''
The tire maker later increased its motorsports involvement to include Pro Solo, Solo II, Rally and Championship Off-Road Racing (CORR) programs. The off-road series, in particular, was instrumental in helping Kumho build its light truck tire sales, which was showing the largest growth rate in the tire industry. ``We race the exact same products the consumer can buy,'' he said. ``There's no test that can dish out the kind of punishment as those trucks do in those 15-minute races.''
The CORR short-course races also have a wide following, with more than 250,000 spectators attending 2002 events and almost 20 million viewers watching broadcasts last year in the U.S. and Canada. Mr. Edington claimed the exposure Kumho received in racing during 2002 was worth 10 times what its racing budget was for the year.
But Kumho also knew it had to balance its racing with product planning to maintain a full line of tire offerings; product development of high- and ultra-high performance tires; promotion of products; and development of a distribution system.
On that end, Mr. Edington said the company's benefits from racing have included both direct and indirect technology transfer; a sharpened technical focus, forcing rapid product turnaround; improved and quicker decision making; improved employee enthusiasm; and quick results.
``You either win or you don't,'' he said. ``Second place is the first loser. Failure is not an option.''
Race drivers also are excellent at giving feedback. ``Racers are the most knowledgeable, enthusiastic customers,'' he said. ``They freely and bluntly offer their opinions and desires on all of your products.''
For Kumho, Mr. Edington said the numbers don't lie when it comes to the impact of racing, particularly in the lucrative ultra-high performance market.
``In 1992, Kumho's ultra-high performance tire market share was nil,'' he said. ``We had no product. If we did, no one would have bought it.''
But today, Kumho claims it holds a 10-percent share of this segment-equal to the major players. ``Kumho is now the tire of choice for the young enthusiast,'' he said, ``and will be their tire of choice as today's young enthusiast becomes tomorrow's mainstream customer.''