PLAYA CONCHAL, Costa Rica — After successfully maneuvering through another tough year punctuated by the financial difficulties of its parent company and the global recessionary economy, Kumho Tire USA Inc. is looking to continue regaining ground in 2012.
Kumho made progress in 2011 as Kumho Asiana Group, the South Korean majority owner of parent Kumho Tire Co. Inc., secured funding through a debt workout situation to stabilize the company.
But it was the loyalty of Kumho's dealers that helped the U.S. subsidiary overcome many of its headwinds, according to Kumho Tire USA executives at the firm's annual dealer meeting at the Westin Resort & Spa in Playa Conchal.
“Your commitment to Kumho was the main factor in allowing us to move forward in 2011,” said Kumho Tire Co. Inc. President J.H. Kim to representatives of the 38 tire dealers and distributors from North and South America in attendance.
While Kumho has a lot of work ahead of it to move forward, he said, good progress occurred during the past year. “As a result, we have made some investment into this market for the coming year.”
The theme for this year's meeting was “Let's Go,” and the company's executives talked about building on the changes made in recent years. They include the closing of three warehouses in 2010 to consolidate and improve delivery service and a shift to sports marketing from an emphasis on motorsports.
“This year I believe that you can agree that our fill rates were among the best of any of your suppliers of passenger tires,” said J.B. Kim, president and CEO of Kumho Tire USA. “We also changed our marketing direction in year 2010 that continued in 2011. Our new focus on sports marketing has placed the Kumho brand in a league with some of the most well-known and popular sports teams in the U.S.A.”
Fill rates hovered around 90 percent in 2011, up from 82.6 percent in the second half of 2010, the company said.
While Kumho didn't introduce any major programs or products during the meeting, Mr. Kim said the commitment to change is not over.
“We want to strengthen our partnership with you and build it for strong success in 2012,” he said. “We are excited to be going together for the coming year, and we are making many changes for the next year.”
Asked what investments are planned, Rick Brennan, vice president of marketing, said Kumho USA expects to receive more tires in 2012 than in 2011 from the parent company's factories, primarily those in South Korea. In addition, the firm is planning to boost its marketing budget by as much as 80 percent.
That will allow, for instance, eight months of television advertising for the Ecsta 4X ultra-high-performance (UHP) tire launched late last year, compared with the original plan of only six weeks of television advertising. Kumho also will do seven months of magazine advertising.
In addition, the company will offer seven months of retail consumer promotions for its Ecsta 4X and Ecsta LX Platinum touring tires starting April 1 and running to Oct. 31.
“So when J.H. (Kim) talked about investment, he talked about investment of money, but also an investment of resources—so committing to production, because we don't have any big production expansions planned for 2012,” Mr. Brennan said.
One project that has been further delayed is the construction of a tire plant in Macon, Ga., where the company broke ground in 2008.
“This project will have to be pushed back as we deal with the uncertainty of the economy and the Chinese tariff situation,” J.B. Kim said. “But you must be confident in the fact that we will continue to focus our resources on providing you, our most valued customers, with the highest fill rates and highest quality products for the coming year even as the emerging markets in other regions of the world grew repeatedly.”
Kumho has taken steps to become an easier company with which to do business, the executives said. This includes eliminating “confusing and cumbersome” programs such as the Kumho Stimulus Program and monthly specials with short windows of opportunity.
The tire maker also is revamping its Fuel dealer program, replacing it with a simpler, more focused one dubbed Premium Fuel.
Now, instead of having to commit to purchasing 200, 250 or 300 units per quarter to earn rebates, associate dealers will have to buy only 12 tires per quarter, Mr. Brennan said. However, those purchases must be UHP products, another change from before, when purchases of all lines were counted.
This emphasis on UHP tires will help Fuel dealers focus on profitable products and should allow more participation as almost every dealer can buy four tires a month, Mr. Brennan said.
“We listened to you, and we've engineered our sales and marketing programs to be more simple, user-friendly and easier to turn a profit,” Armand Allaire, national vice president of sales, told dealers during the meeting's business session. “In return, we ask you to buy more Kumho tires. Buy more lines from us and while I'm at it, let's do it together more often.”
Although Kumho did not introduce any tires at the meeting, the company is expanding some of its current lines for better coverage.
They include nine new sizes for the Ecsta LE Sport KU39, four sizes for the Ecsta LX Platinum KU27 and nine for the Eco Solus KL21.
The company also is discontinuing a number of sizes to reduce its SKUs. “There are some sizes we're letting fall off the food chain because we have multiple offers in the same size or because the marketplace is dwindling in those particular sizes,” Mr. Brennan said.
Kumho also wants to improve its efforts in winter tires, where the company has a minor presence in the U.S.
The company's latest winter tire is the Kumho i'zen studless winter tire. It features a directional tread pattern and is offered in 25 sizes in extra load and standard fitments.
After experiencing shortages of winter tires in 2011, the company has received a commitment from Kumho in South Korea for “a certain amount of supply for winter tires above and beyond what we needed for our normal business for 2012,” Mr. Brennan said.
That will reassure customers that the product will be available, he added.
Mr. Allaire specifically touted the company's newest UHP tire, the Ecsta 4X, which Kumho introduced late in 2011.
“I'm personally here to say there is no better performing balanced all around tire,” he said. ‘Sell it. It's taking off.”
And like the bravado of a champion boxer, Mr. Allaire offered a challenge to the meeting's dealer attendees:
Put a set of Kumho Ecsta 4Xs on their personal vehicle and if the tires don't prove to be of superior performance and price value than any competitor, he'll buy them back.
“I don't care who it is, I will personally buy them back from you. Cash. I will even let you take a picture of me kissing the tire that beat this value package and you can send it to that manufacturer and you can put it in the news in (the) trade publication. That's how confident I am,” he said.
Asked how likely it might be that Mr. Allaire would have to kiss a competitor's tire, Mr. Brennan responded that Mr. Allaire wouldn't have made the challenge if he thought he was going to have to.
“We're pretty confident he won't have to kiss nothin',” he said.
To reach this reporter: [email protected]; 330-865-6131.