SEOUL, South Korea—Hankook Tire Co. Ltd. has begun supplying OE tires to Daimler A.G. for the Mercedes-Benz S- and E-Class models, a key step in the company's effort to become a global top tier tire maker, according to the company's top executive.
“We are a little bit shy company, but supplying tires to Mercedes S-Class means a lot to us,” said Seung Hwa Suh, vice chairman and CEO. “That's why we are saying this is an historic day for Hankook.”
Hankook unveiled the new OE fitments Sept. 2 during its Tire Press Day 2013 event in Seoul attended by nearly 100 members of the South Korean media as well as the U.S. tire trade press. In addition to the Mercedes announcement, Hankook revealed a new OE fitment on BMW A.G.'s 5-Series, expanding its supply relationship with the German auto maker beyond the 1- and 3-Series vehicles. Adding Mercedes to its OE mix gives Hankook supply agreements with Germany's Big 3 auto brands, which includes Audi A.G., the company said.
Hankook also announced OE fitments on the 2014 Nissan Altima, 2013 Honda Civic and 2014 Toyota Corolla. The Civic fitment is Hankook's first with Honda Motor Co. Ltd. For the Mercedes S- and E-Class vehicles, Hankook will supply its Ventus Prime2, size 245/55R17W, and the Ventus S1 evo2 in size 225/50R17W, respectively.
The S-Class is considered Mercedes-Benz's luxury flagship. The 2014 version is a redesigned successor to the previous-generation S-Class range that debuted in 2007 as well as the platform Mercedes will use to serve customers previously targeted by the now discontinued Maybach luxury line, according to a report in Autoweek magazine, a sister publication of Tire Business.
Hankook will produce the tires for the Mercedes S-Class at its plant in Geumsan, South Korea, its primary factory for ultra-high-performance tires. The BMW 5-Series will come equipped with Ventus S1 evo2s in size 225/55R17W, while the Altima gets the Optimo H426, size P215/60R16T. “For the premium sedan market, German car makers have a good reputation,” Mr. Suh said in his Tire Press Day presentation.
“And it has true significance for our company to provide tires for premium car makers of Germany. Hankook puts the first priority on the quality of our own products and we have invested much in R&D to provide better quality tires.” This effort has paid off, he said, with the OE supply agreement with Mercedes Benz, which Mr. Suh described as the most premium car maker.
“This shows that our company's quality has been recognized worldwide,” he said. Hankook called the supply agreement with Nissan a “giant step” into its future as it marks the first Korean tire brand to provide OE fitments to all three top Japanese vehicle brands—Toyota, Honda and Nissan.
For the Civic, Hankook also is providing the Optima H426 in size P205/55R16H for the Civic and in size 195/65R15S for the Corolla. Last year these models—the Honda Civic, Toyota Corolla and Nissan Altima—ranked second, fourth and fifth in North America, said Hyn Bum Cho, president and chief marketing officer for Hankook, “so these are truly popular models in North America.” Hankook now provides OE tires to 24 auto makers worldwide.
Looking forward, Mr. Suh said Hankook is continuing efforts to improve the quality of its products and become a top maker in the global market. “We have yet to join the top tier tire makers, however, by 2020 we want to become a leading global tire maker,” he said. “With this aspiration in mind, we will not stop our efforts to become a better company.”
While Hankook has yet to achieve its ultimate goal, the fact that it has become, business-wise, a supplier to these premium car brands “means that we are a premium tire brand, especially in the medium-size sedan and above segment,” Mr. Cho said. This enhanced standing in the OE market will have a positive impact on Hankook in the replacement tire market, he said. The achievement “will allow us to increase overall sales,” he said.
To become a global top tier tire maker, the company is focusing on four areas, Mr. Cho said. The first is global supply chain management, which includes increasing the scale of the company's production facilities across the globe to create economy of scale.
This is being done with quality in mind first, before quantity, he added. “When you have economy of scale, you can have capability for procurement, production and sales with higher brand awareness from consumers,” Mr. Cho said.
Hankook also is strengthening its capabilities in accordance with global technology standards, has expanded its distribution to extend the company's reach globally with customers and has taken a long-term approach to disseminating a consistent message worldwide, based on the slogan “Driving Emotion Beyond Mobility.”
Currently the tire maker's own global distribution network of Hankook Masters locations consists of 4,400 offices or stores, Mr. Cho said. Plans call for increasing this number to 7,700 locations by 2017.
“By globalizing our production sites we build global supply networks and we have the technological capability recognized worldwide, along with a distribution network that can respond to demands from across the globe and brand communication that is very effective,” Mr. Cho said.
“By focusing on these four elements, Hankook Tire has been able to grow into a true global brand.”
To reach this reporter: dzielasko@ crain.com; 330-865-6131.