Forward-focused Kenda to introduce new Klever tires

Higher tire inventories and costs aside, Kenda Tire USA Inc. is seeing growth in many areas.

Brandon Stotsenburg, vice president, automotive, for Kenda Tire, told Tire Business that new products from the brand's most popular lines are coming soon.

I will primarily address this question from Kenda America's perspective. Industry inventories were quite high entering 2023 with higher costs related to inflation and the supply-chain malaise that everyone experienced in 2022. Despite those challenges, Kenda has been able to achieve growth across many of our businesses. The consumer tire business has remained strong with growth through May, while some of our specialty segments have been slower due to industry inventory levels, but still remain strong.

Inflation and the resulting actions by the Federal Reserve to increase borrowing costs and reduce available consumer credit have been issues affecting overall demand across many consumer goods. We have effectively positioned our brand and products as premium performance at a value price. As economic pressures hit the consumer, this positioning has been a benefit for our channel partners and our end-users. As "miles driven" remains reasonably strong, consumers continue to need replacement tires and our dealers have been able to offer Kenda at value pricing without having to sacrifice performance for the consumer.

Other factors, such as the West Coast port disruptions, continue to provide challenges to overcome. Kenda has put a North American team in place to allow us to be as proactive as possible to minimize these issues, which affect the overall timelines to process imported inventory. Other supply-chain-related issues remain constant as both the rail and trucking industries have intentionally limited supply to assure that pricing and costs remain a challenge to manage.

The direct impact to American Kenda has primarily been related to supply-chain concerns and the related impacts on overall inflation. As the war has limited some imported materials for our OE customers, this can disrupt production plans. There continues to be some disruptions to shipping lanes and available vessels as these companies adapt to the decreased demand sourced from Asia. Our strategy remains being as close to our vendors and customers as possible to adapt and anticipate issues so that they can be mitigated as quickly as possible.

The answers depend on the specific regions and markets. Europe has experienced higher inflation with resulting decreases in discretionary income affecting demand. Rising fuel costs have also had an effect on miles/kilometers driven, which has reduced tire demand in many markets. Asia continues to see price pressure related to many of the downstream issues related to the war.

Supply-chain issues remain depending on the specific region. Overall, ocean-freight costs and general supply for container availability has improved significantly from a year ago. Within North America, inland costs and predictable service remain challenges. Our trucking and rail systems remain a constant challenge and overall costs for these elements of the supply chain continue to increase.

From American Kenda's perspective, we have invested in significant resources to enable us to be proactive to provide our direct customers with predictable, high-service deliveries. We have also been able to reduce the anticipated order to delivery timelines which is very positive for our Kenda dealers and distributors and Kenda Traction dealers.

Raw materials pricing and availability remain in flux. We have seen some price reductions, but also some increases depending on the materials. As new materials are becoming more important for both performance and sustainability, Kenda will continue to search for the best materials to provide premium performance at a value price for our customers.

Kenda has approached pricing based on the outside market factors, which have been discussed related to overall supply and demand. Corporately, we have many programs in place to reduce costs and off-set outside factors, which allow us to price appropriately for our brand and product value. Across our product segments, Kenda has tried to limit pricing impact to our customers to provide them the best opportunity to recover margins above the industry average while providing the end-user with a high-performance product. As we move through 2023, we will continue to be cognizant of outside factors that may affect pricing and will respond appropriately in the best interest for both Kenda and its customers.

Kenda is working globally to evaluate the very different EV vehicle specifications and tire needs. Depending on the region, EV applications vary. The original-equipment manufactures in North America have focused primarily on higher-positioned vehicles priced at MSRP levels above $50,000 so they can recover significant costs for tooling and development. Fundamentally, if the vehicle requirements for load and speed rating are met, current Kenda tires will be capable on those vehicles.

The primary EV vehicle tire-application differences relate to adapted needs for improvements in rolling resistance, noise level and the effects on wear due to higher torque.

Kenda is developing or adapting the technologies to provide both OE and aftermarket customers with tires that will offer EV applications premium performance at a value price. In North America, we intend to offer products under the Vezda and Klever umbrella that will meet the needs of EV customers.

Kenda has found that racing DOT-marked tires in open competition against other strong brands demonstrates our products' performance and adaptability to our channel partners and enthusiast consumer communities. We have identified this as "Podium2Pavement" and have actively pursued opportunities for both our Klever light-truck brand as well as our Vezda performance passenger brand.

There are multiple elements to the strategy starting with identifying racing opportunities that will directly demonstrate the product performance in extreme conditions that typical consumers won't experience, but will appreciate as its relates to their needs. We literally are developing tires that translate from winning performance in competition directly to the consumer. As a Vezda example, our updated construction and compounding used in autocross and in Formula Drift is applicable for the Vezda UHP and Vezda UHP Max tires offered for daily spirited summer driving. The learning in those environments will translate to other Vezda touring and UHP tires that can be used year-round by consumers.

For our Klever example, we have professional off-road drivers who have participated in our development and testing programs on our Klever A/T2, Klever R/T and Klever M/T2 tires. As these products are directly off the shelf to the track, the construction and compounding translate to immediate benefits to the consumer.

Our engineering team is able to utilize the learned knowledge to incorporate additional performance benefits while also optimizing the consumer needs for wear, noise and on-road performance. Additionally, Kenda just introduced the only true Kenda red-letter compounded tires in our Klever R/T and M/T2 patterns. We have won several races on these products and our retailers are now selling these tires with a great response — when consumers see our unique look on a wheel in-store, they literally get closer to touch the tires.

We take the product elements to our channel partners to allow them to be educated about our technical developments with programs such as Kenda light-truck boot camp and attendance at the races. We will offer our channel partners the opportunity to compare Kenda products directly with brands of their choice in real world environments that their consumers would experience. We are working to develop additional assets for both our Vezda and Klever brands to allow our Kenda retailers to showcase these products more easily to their customers in store.

Yes! Kenda is moving forward in the Americas focusing on Vezda, representing our performance brand for PCR vehicle applications and with Klever, representing our LT vehicle applications. We are launching our Vezda Touring 4S tire now with our distributors anticipating inventory in August/September for retailer availability in late summer. This tire is really an outstanding grand touring all-season-plus application for four seasons, which includes tremendous wet performance, a 60,000-mile limited warranty and 3-Peak Mountain Snowflake (3PMS) certification across 45 sizes, primarily V-rated for touring sedans, CUVs and small SUVs. It should be a great tire for all geographies in North America.

We will formally announce two new Klever products at the SEMA Show this fall, which will update our light truck line-up so our channel partners can cover almost every application with "Premium Performance at a Value Price."

As many of the macro-economic indicators remain mixed with increasing indications for slowdowns, miles driven remains strong. Vehicle life continues to increase which provides additional opportunities for aftermarket service and tire replacement. The continued demand growth for light truck, SUVs and CUVs has shown a growth in end-user awareness of their tires as these consumers generally do more education prior to their replacement purchases. This provides retailers additional opportunities to engage these consumers to provide aftermarket products and tires that will properly meet their needs.

Many consumers continue to experience the effects of inflation which are stressing their ability to replace their tires in a timely manner with proper products. Kenda is working with our distributors and retailers to adapt their forecasting related to these issues. Our message for value has resonated in this environment and offers retailers opportunities to provide value pricing without sacrificing safety or performance.

The best opportunities mirror the vehicle segments that are growing — light truck, SUV and CUV. Kenda has added sizing and products that align with those segments. Additionally, there is an increasing desire for products with the 3PMS designation for these applications. Many products with the designation have been categorized as "winter tires" and have a distinct appearance matching that description. Kenda has introduced its new Vezda Touring 4S to meet the 3PMS designation offering true, four-season performance and an all-season grand touring appearance. This provides retailers an opportunity to confidently sell these tires with confidence in geographies that get occasional adverse winter weather and enhanced rain.

When the pandemic limited travel, there had been an increase in grassroots motorsports, including drifting, autocross and endurance racing. Kenda has introduced products which are highly demanded for these segments that offer premium performance in competition with better wear for the user. Our Vezda UHP and UHP MAX tires are proving to be a strong value in these growth areas in addition to offering premium UHP summer products for street applications.

We also recognize the growth for EV that is just beginning to accelerate. As previously mentioned, Kenda will introduce additional products optimized to meet the primary consumer needs that are not being currently met for wear and value pricing.

Kenda will introduce two new Klever products at the 2023 SEMA Show in November. We will additionally have several new ST radial products as well as new ATV/UTV tires that will complement our passenger and light truck offerings.

Airless tire technology continues to evolve. Kenda offers this for specific non-DOT industrial applications to meet specific needs to eliminate vehicle down time. There may be some extended opportunities for DOT applications as the technology continues to evolve.

There are a series of technologies specifically related to the EV market growth, which will change the market as well. These vehicles must meet increased load and speed-rating needs while requiring reduced rolling resistance and noise with very good ride and handling. Wear has been the primary sacrifice and Kenda is working to meet all of these needs to offer a value price without sacrificing wear. There is also a demand for EV-capable products with winter performance and 3PMS certification. Four-season products for EV that can also meet North American wear requirements at a value price point will be a winning product combination.

Continued evolution of tire information systems that are integrated into vehicle technology is an absolute game-changer. There are a number of sensor technologies that are being explored, which can provide data to integrated platforms with algorithms that can modify the vehicle application in real-time for optimized performance or to alert for failure to prevent accidents.

Tire-related sensor and chip technology is evolving quickly and will be a primary element integrated into these vehicle systems, which will move progressively to be extra-vehicle, not just intra-vehicle. As the available data are turned into actionable information, we will see additional safety enhancements along with real-time performance benefits.

Directly related to the progression of information systems is the growing awareness of artificial intelligence (AI) in many industries. This will also affect the tire industry as many of the advances progress further. Anticipate design and testing to improve rapidly for those companies that can take advantage of the rapid learning and applied applications. There will continue to be increasing opportunities for both mechanical and material design features that AI should accelerate as transportation options evolve, including, at some point, self-driving vehicles.

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Kenda continues to take the stewardship of our planet seriously. Kenda is working tirelessly to incorporate sustainable materials into our products, including soybean oil, silica from sustainable sources, and use of recycled materials. We are also working to increase the amount of sustainable materials that are being put into our products. Each generation of Kenda products improves not only the performance, but the sustainability of the products. This continues with our promise of a premium performing product at a value price.

As a specific example, our launch of the Vezda Touring 4S tire showcases some of these activities. This tire is a true four-season product offering exceptional wet and dry performance while adding 3PMS certification, low noise levels and a 60,000-mile limited mileage warranty. Kenda developed a unique soybean oil and silica-blended compound, which also has significantly improved the sustainability of the product. As our Kenda retailers begin selling this product, we believe that combination of technologies and performance combined with excellent margin opportunities can't be beat.

Kenda prefers to make announcements closer to the time when it will influence the effected markets. We are continuing to add personnel across many regions and segments to support our growth. For Kenda America, we have a number of investments and personnel additions that will have a positive impact for our customers and will provide details as we approach implementation.

The tire industry remains one of the few opportunities where families can own and run a profitable business in modern society. There continues to be challenges for retailers and channel partners, including the continued push for consolidation driven primarily by private equity. Additionally, the end-user will continue to look for online sources for information and sourcing opportunities for tires. Kenda has developed strategies to assist our channel partners related to these challenges which will attract consumers to our brand and offer our channels the opportunity to recover higher margins.

We have already discussed a number of product issues. An ongoing challenge is SKU proliferation. As the automotive industry rapidly shifts toward alternative vehicles from traditional internal-combustion-engine applications, we will continue to see more SKUs, particularly in the larger-wheel diameters, 18 inches and larger.

Unless the consumer is willing to accept compromises or vehicle manufacturers reduce the platform variations, this trend will continue. This affects development costs, manufacturing efficiencies, inventory carrying costs and retailer education needs. Kenda is working hard to provide aftermarket solutions to assist these issues to reduce costs and provide value.

Supply-chain costs and challenges will remain a concern moving forward. With overall demand for consumer goods dropping in 2023, most of the supply-chain challenges we saw in 2020-22 have been reduced. However, there are significant infrastructure issues within North America, including rail, ports and underlying concerns with supply for trucking that remain a concern for the future.

As U.S. duty policies remain inconsistent, it is difficult for global manufacturers to properly plan and anticipate costs to support the vehicle application needs. It is difficult to plan production when supply-chain elements must remain in flux. Kenda is focusing on the elements that we can control to minimize any impacts on our customers and remain flexible in a dynamic environment.

Kenda made a significant brand announcement as a follow-up to our recent 60-year anniversary when we announced our new logo expressing our tagline "Designed for Your Journey." We believe that the logo will provide an immediate opportunity to express our brand identity in a modern, relevant way to consumers and our channel partners. We are already using it across our online and social media platforms with a positive response. We will continue to update and integrate across all of our product segments globally.

We introduced our tagline several years ago as an expression of our brand that Kenda products are designed at a premium level for your life's journeys, whether it is driving your car on Vezda or Kenda on a bicycle, motorcycle, golf cart, working industrially or towing a trailer with Klever light truck tires.

We want our channel partners to know that our value proposition is a two-part message:

• First, we offer premium performance at a value price with products designed at our Kenda American Technical Center (KATC) specifically for our end-users in the Americas. Read our reviews — our products perform at levels that will compare to any recognized brand in the segment. For our automotive products, Kenda offers a complete product screen for passenger and light truck products, which is updated to offer solutions to consumers looking for outstanding tire performance from a global company.
• Second, we design our channel programs to consistently offer above-average margin opportunities for our channel partners. This allows the end-user to buy value-priced products performing at a higher level with confidence. Our warranty rates are very, very low, but any issues are addressed with our channel partners from our engineering team at KATC. We work very hard to offer all of our retail partners the chance to sell the brand confidently and consistently make higher margins than other choices. We encourage you to ask our Kenda retailers why they are selling more Kenda tires every day and consider joining our Kenda family.

The last and most important thing that we want to express is a sincere thank you to the channel partners in our Kenda family. As a company still managed by the founding family, Kenda recognizes that our customers have many choices. Our team, regardless of product segment, is working very hard to provide our partners with the best services and products to enable them to provide premium performance and an opportunity to grow your business. We are selective in adding to our family, but are very open to conversations with retailers and regional distributors that see a profitable opportunity with our brand.