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Hankook links success to its dealers

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RANCHO MIRAGE, Calif.—Hankook Tire America Corp.'s sales grew 22 percent in 2006 to $613 million as the company posted gains in tire sales and market share, the tire maker's new president told about 80 dealers attending the firm's “Dare to Compare” dealer meeting Feb. 8 in Rancho Mirage.

Greg Pae, who became president Dec. 1, attributed much of the company's success last year to its independent tire dealers. The strong showing came despite the industry's sluggish performance in both original equipment and replacement sales in North America.

In a speech to dealers, Mr. Pae said Hankook also reported sales of $77 million in Canada in 2006, bringing the company's total North American sales to more than $690 million.

For 2007, Mr. Pae forecast U.S. sales topping $672 million. Worldwide, he predicted the company's sales would reach $3.6 billion, up from $2.95 billion in 2006. The 2006 total, he said, places Hankook in a tie with Japan's Yokohama Rubber Co. Ltd. as the world's seventh largest tire maker.

Hankook is committed to investing in manufacturing and technology, Mr. Pae told dealers. The company's new factory in Hungary is expected to come on stream later this year and produce 1.3 million radial passenger, light truck and truck and bus tires in 2007.

In 2008, the factory's output is expected to rise to 5 million units, with output reaching more than 10 million units by 2011.

This additional capacity will boost the company's annual production to more than 68 million units by 2008 and to more than 75 million units by 2010.

Bill Finn, Hankook's senior vice president, said the company continues to gain original equipment fitments in North America, including on the new Ford Edge, which the company is supplying with the RH03 in size P235/65R17. Hankook tires also will be found on new Ford and Lincoln “people mover” minivan-type vehicles starting in 2008.

Besides a number of Ford models, Hankook also has original equipment fitments on a variety of General Motors (GM) Corp., Hyundai Motor Co. and Kia Motors Corp. cars and light trucks and Navistar International Corp. commercial vehicles.

Hankook also is a supplier to Ford Motor Co.'s Around-the-Wheel tire program, which includes 4,400 Ford, Lincoln/Mercury and Volvo dealerships, as well as GM's Goodwrench program, which supplies tires to more than 6,000 GM and Saturn dealerships.

Through the Ford program, Mr. Finn said Hankook had a 5.6-percent share of sales in 2006. Michelin was No. 1 at 36.7 percent, followed by Goodyear at 30.6 percent and Continental at 23.6 percent.

In replacement tires, he said Hankook had a 4-percent share of the passenger tire market in the U.S. in 2006 and a 2.5-percent share in light truck tires. For truck and bus radial tires, the company had a combined original equipment and replacement share of 2.5 percent.

In 2007, Hankook will introduce the Dynapro ATm RF10 premium all-terrain light truck and sport-utility vehicle tire, said Bill Bainbridge, director of brand communications.

Developed for high-powered pickup trucks, the tire features a 7- to 8-percent wider footprint than comparable products to resist uneven wear. This provides better grip and acceleration under all road conditions, Mr. Bainbridge said.

The tire's tread design contains sharp edges patterned to look like “tiger's teeth,” he said, with those teeth also extending to the tire's shoulder design.

Available starting in May, the RF10 will be offered in Q, R and S speed ratings in 15- to 22-inch rim diameters and 50- to 85-series aspect ratios. P-metric sizes will be available in 2008.

The company also recently introduced a long-haul truck tire, the Radial TL01, which has a six-rib design and features straight grooves for low rolling resistance.

It also features multi-angled siping on the interior ribs to aid in wet traction, Hankook said, and has a defense groove on the outer ribs for resistance to irregular wear.

In his talk during the dealer meeting, Mr. Bainbridge outlined the company's marketing plans for 2007, which Hankook is supporting with a 24-percent increase in the company's marketing budget.

“One of our major objectives for 2007 is to 'value up' the brand as we continue building brand equity and loyalty with dealers and consumers,” he said.

Plans include a self-study training and certification program for dealers that will be introduced in the third quarter, participation in a growing number of motorsports events—including drifting and Time Attack, where amateur drivers try to turn the fastest lap in their cars—and the development of a mobile marketing exhibition housed in its own tractor trailer.

In addition, the company will begin advertising for the first time on satellite radio and will introduce new advertising starting in late April or early May using the theme, “Tame the Road.”

Mr. Bainbridge noted that the tire industry in 2006 overall was flat and not much growth is expected in 2007.

As a result, to have success in the marketplace, “We've got to take business from somebody else because new business isn't going to fall into our lap,” he told dealers.

“You've got to decide who you are going to take business from and as a brand, who we think we're best suited to take business from. And that's again where our 'dare to compare' attitude comes up.”

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