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November 21, 2017 01:00 AM

Hankook revamping Laufenn brand strategies

Don Detore
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    Hankook Tire photos/Tire Business image by Michael McCready
    Hankook TIre America Corp. President Hosung Suh

    LAS VEGAS — Almost three years after Hankook Tire America Corp. launched its entry-level Laufenn brand, the tire maker is evaluating internal strategies to position the brand better and spur growth.

    Among the strategies under consideration are the price policy for dealers, distribution policies, wholesaling and retailing, etc., according to Hosung Suh, who became president July 1 of the Nashville, Tenn.-based unit of South Korea's Hankook Tire Co. Ltd.

    Mr. Suh and other Hankook executives discussed the Tier 3 passenger/light truck tire brand, among other topics, with Tire Business during the SEMA Show, held Oct. 31-Nov. 3, at the Las Vegas Convention Center, where Hankook's exhibit focused on the Laufenn brand exclusively.

    • This story appears in the Nov. 20 print edition of Tire Business.

    "In order to grow further, we are going to review current strategies and develop new strategies by the end of the year," Mr. Suh said.

    Those strategies will include the launch of 60 new sizes for the Laufenn line, covering rim diameters up to 20 inches in diameter. The largest size the line offers currently is 18 inches.

    "The way we have (Laufenn) positioned hasn't allowed us to meet our goals," Mr. Suh said. "The first half of this year, we have some issues to cope with, (such as) market saturation, to compete in the U.S. market."

    Mr. Suh said that as a Tier 3 product, Laufenn is "overqualified."

    "Our first priority is having quality, and we have made it almost the same as our Hankook brand," he said. "But the price point is different.

    "We cannot lower quality."

    Mr. Suh said Hankook — ranked as the world's No. 7 tire maker according to Tire Business' 2017 Global Tire Report — is targeting the U.S. market for continued growth in 2018. He said he believes that is possible as production ramps up at Hankook's plant in Clarksville, Tenn., its first North American factory.

    Hankook celebrated the grand opening of the $800 million plant, its eighth worldwide, on Oct. 23. It is expected to produce 5.5 million passenger and light truck tires annually in the first phase.

    Hankook Tire America Corp. photo

    Hankook's exhibit at the SEMA Show, held Oct. 31-Nov. 3 at the Las Vegas Convention Center, focused on the Laufenn brand exclusively.

    Among the products made there will be the Kinergy GT, a touring all-season tire that recently was named an OE fitment for the 2018 Honda Accord and Toyota Camry.

    That tire will be made exclusively in the U.S.

    "The U.S. market is the biggest market in the world," Mr. Suh said. "In order for Hankook Tire to grow globally, we have to grow in the U.S."

    Hankook's market share in Europe is more than 8 percent, Mr. Suh said, double what it is in the U.S. That number increased after Hankook opened a plant in Hungary a decade ago, and the firm expects that to hold true after expanding to the U.S.

    "Even though conditions for having a plant here are tough, because everything is expensive, we felt we should have a plant here," Mr. Suh said.

    Delivery time will be reduced significantly, he said.

    It takes around three months for an order to be manufactured at an overseas plant and then delivered to customers. He said once the Clarksville plant ramps up, it will take less than two weeks to get the product into a customer's hands.

    "We can respond to current market trends instantly," he said.

    The Clarksville plant won't reach capacity until mid-2018. Once production stabilizes, officials will begin the process of review for the second phase, which likely will include an increase in production for passenger and light truck tires.

    While Phases 3 and 4 are hypothetical at this point, Mr. Suh said it's possible that a truck tire expansion will be considered for the location.

    "We want to grow those markets in the U.S.," he said. "It's pretty crucial for our growth and brand awareness."

    Hankook has invested heavily in marketing its product in the U.S., using sports primarily to deliver its message. The tire maker has sponsorship deals with Major League Baseball and the National Basketball Association, among other sports entities.

    "One of the many attributes of tires is they are dynamic," Mr. Suh said, "and so are sports."

    With market conditions flat and competition fierce in the U.S., Mr. Suh said it is unrealistic to expect double-digit growth in 2018. The OE market will continue to serve as a strategy toward growth.

    "As we meet the (stringent OE) requirements, it proves our inner technologies and quality assurances to all customers, not only for OEs but also for dealers," Mr. Suh said. "Our end-user customer recognizes this. This means we see more Hankook tires in the U.S. market, that in turn improves our brand awareness."

    Hankook reported sales of $1.25 billion in North America through the first nine months of 2017, unchanged from the same period in 2016. North America represents nearly 28 percent of Hankook's global sales revenue.

    Letter
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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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