'(Re-)building a house' Sales, strategy, goals Other plans, products

VIEQUES, Puerto Rico—Kumho Tire USA Corp.'s top dealers, gathered recently at the tire company's dealer meeting on Vieques, were presented with an array of ambitious product and marketing plans for next year, but not before they heard Chairman Harry Choi deliver a mea culpa for the tire maker's shortcomings of the past several years. Mr. Choi, chairman of Kumho USA since January 2013, acknowledged that Kumho's product portfolio had grown old and dealers had experienced supply problems as the parent company battled through a string of corporate losses, the recession of 2007-11 and logistics problems related to the elevated U.S. tariffs on Chinese imports from 2009-12. The Rancho Cucamonga, Calif.-based company hopes to reverse those uncertainty and product availability issues in 2015 with the launch of six key products, enhanced global production capacities and an energized marketing strategy built around its sponsorship of the National Basketball Association. “We are building our house,” Mr. Choi told a group of about 30 key customers gathered at the company's 2014/15 dealer meeting on Vieques, an island off Puerto Rico's coast. “That's ambitious and difficult,...but it can be achieved with our best efforts and your support.” Even as Mr. Choi and other executives pitched Kumho's plans for the refreshed product range, these same execs had to plead for patience, as most of the new products won't be available until mid-2015 or later. Once the company has rolled out its renewed products, Kumho intends to refresh a portion of its portfolio every year, Mr. Choi pledged, noting that Kumho's recent research and development cooperation pact with Yokohama Rubber Co. Ltd. is providing key R&D input. UHP tires will be refreshed every three years, Mr. Choi said, while touring and SUV tires will be renewed on four- and five-year cycles, respectively. Mr. Choi told the assembled dealers Kumho is shooting to sell 10 million passenger/light truck tire units in North America by 2018, which should equate to a 3.5-percent market share. This would put Kumho back at the market position it achieved in 2007 before financial problems at its parent company and the elevated U.S. tariffs of 2009-12 put a crimp in the firm's ability to provide product and grow. Kumho's sales in North America last year were estimated at $675 million; sales through mid-2014 were up 3.6 percent over 2013, according to the firm's half-year financial report. Integral to Kumho's strategy to rebuild its market position and restore dealers' faith in its ability to overcome past fill-rate issues will be the company's plant under construction in Macon, Ga. Due on stream by 2016, that facility eventually will be producing up to 4 million units annually. At the same time, Kumho said its decision in 2009/10 to move the majority of production destined for the U.S. back to South Korea from China—to deal with the elevated U.S. tariffs imposed then—will put the company in a strong competitive position now that elevated countervailing duties are again being levied on Chinese consumer tire imports. Separately, John Hagan, Kumho's sales vice president since December 2013, said the firm's goal rolling into 2015 and beyond is to become the “easiest manufacturer to do business with.” To accomplish this, Mr. Hagan said Kumho is investing capital and human resources into enhancing its business systems, working to become more transparent and dependable—goals that include a pledge to deal with all dealer concerns/requests within 24 hours. Included in this initiative will be the addition of a Southern sales division, Mr. Hagan said, and increased accessibility to Kumho's sales tools, inventories, etc., through the launch of an iPad program with the field sales force, key distributors, etc. From a marketing standpoint, Mr. Hagan said, Kumho's overriding goal is to improve the lives of its customers. “We want to change the category,” he said, “by being distinctive, innovative.” Kumho's “brand belief,” he said, is to make “every drive a new chance to experience a moment of perfection.” Mr. Hagan said in a separate interview with Tire Business that consumers see Kumho as a “strong Tier II” brand, which is a positioning Kumho is comfortable with, but the company still sees a need to strengthen its brand position with the distribution trade, where the image has suffered a bit in recent years. Kumho will address this in 2015, Mr. Hagan said, through the product upgrades, generous dealer benefits through the company's Fuel dealer program and consistent pricing policies. Mr. Choi stressed that Kumho's recent moves to strengthen its OE position on North American vehicles also is a key factor in differentiating the brand from the competition. Other actions Kumho is planning for 2015: c A return to motorsports, grassroots style—Kumho will offer contingency support to racers competing in a limited number of Sports Car Club of America (SCCA) series. Concurrent with this, the tire maker is launching the V720, a limited-edition street/track tire that will be UTQG treadwear rated at 200 to meet new SCCA minimum requirements. “The dealers want us there (in motorsports),” Mr. Hagan said. c Re-energizing its truck and bus radial program with appropriate North American sizes and SmartWay-verified products, working more directly with “servicing dealers,” he said. For the most part, dealers attending the meeting welcomed Kumho's candidness and initiatives for 2015 and beyond. Mike Joines, president of Tire Rack Inc., summarized many dealers' feelings, saying he hopes Kumho's initiatives will help restore the brand to what it was five or more years ago—that is, a leading “value” brand that delivered above-average performance at an “affordable” price. Representatives of several of the dealerships attending the meeting said they had added Kumho to their portfolios in the past two to three years, during the brand's recent struggles. On the product front, Kumho is launching: c Solus TA71, an all-season grand touring tire that will be available in 38 sizes in 15- to 19-inch rim diameters. It will be backed by a 60,000-mile limited treadwear warranty, and thus targeted to compete with the Bridgestone Turanza Serenity, Michelin Primacy MXM4 and Pirelli Cinturato P7 All Season. It is due out in the second quarter. c Solus TA11, an entry-level T-rated all-season touring tire to launch in the third quarter in 44 sizes in 13- to 18-inch rim diameters. It's being targeted against the Goodyear Integrity and Assurance, Michelin Defender, Pirelli P4 All Seasons and Yokohama Avid Touring S. c Crugen Premium KL33, an all-weather performance tire for crossovers and SUVs, to launch in the second quarter with 30 sizes in 16- to 20-inch rim diameters and T, H or V speed ratings. It's already OE on the Hyundai Santa Fe and Kia Sonata and is being pitched against the Hankook Ventus AS RH07, Michelin Latitude Tour, Bridgestone Dueler H/L Alenza Plus, Continental CrossContact LX and Goodyear Assurance TripleTread All-Season. Kumho hopes to offer a 50,000-mile warranty. c Road Venture AT51, an on-/off-road performance tire set to launch in the second quarter in 43 sizes in 15- to 20-inch rim diameters and in P-metric, LT-metric and Euro metric fitments. It's being targeted against the BFG All-Terrain T/A KO, Michelin LTC A/T 2, Goodyear Wrangler A/T-S, Pirelli Scorpion A/T and Yokohama Geolander A/T-S. c Ecsta 4X II, a premium all-season ultra-high-performance tire, set to launch in the second quarter in 53 sizes in 15- to 20-inch rim diameters in V and W speed ratings. It will be backed by a 40,000-mile warranty and is being targeted against the Bridgestone Potenza RE970 AS Pole Position, Continental ExtremeContact DWS, Michelin Pilot Sport A/S Plus and Pirelli P Zero Nero All Season. These six are in addition to the Solus TA31, an all-season high-performance touring tire that Kumho launched recently and already is OE on the Kia Soul, Chrysler 200 and Hyundai Sonata in North America. It is available in 28 sizes in 14- to 18-inch rim diameters and is targeted to compete with the Bridgestone Ecopia EP422, BFGoodrich Advantage T/A, Goodyear Eagle LS-2 and Michelin Primacy MXV4. It carries a 60,000-mile treadwear warranty. Separately, Kumho disclosed it recently moved its Canadian sales office to Toronto from Vancouver and hired Greg Lamothe to be director of sales. Mr. Lamothe, who has held executive sales positions with Zafco Canada Inc., Remington Tire, Tirecraft Group Inc., OK Tire Canada and others, joined Kumho Tires Canada Inc. Sept. 1. To reach this reporter: [email protected]; 330-865-6145. Twitter: @reifenmensch