In a little more than a year, Hankook Tire & Technology Co. Ltd. expects the expansions at its plant in Tennessee to begin to be beneficial for North American customers, according to North American CEO Rob Williams.
Where do you see opportunities for growth the rest of the year?
We have always seen this year as a transitional year, especially as we look ahead to Phase 2 and Phase 3 at our Tennessee plant in Clarksville, which we expect to benefit from late next year or early 2026.
However, we remain focused on growing our market share, and one way we are doing so is by identifying those areas where we may be considered a "smaller player" and investing in those.
Much of our growth strategy now is about balancing that intentional, targeted growth in those lower market share areas and preparing the infrastructure for the expanded production capability that will come from our plant's expansion.
One of our biggest growth priorities for 2024 has largely been around continuing to grow our current dealer network. We want to keep expanding those relationships with regional and national dealers, as they are at the heart of what we do.
In addition, we are dedicated to our OE business and continue seeking opportunities to strategically grow those relationships. Once again, we need to balance that objective with our current production capabilities, but we are excited to see the opportunity that lies ahead with our continued investments.
Any concerns about the softening EV market?
We continue to see EVs as a promising growth market. There will always be ebbs and flows in demand, especially as drivers and auto makers find a balance between cost and benefit. Hankook's consumer gauge index survey found that drivers are most likely to consider the overall cost and accessibility of charging stations when deciding if they will make the switch to an EV, showing us that EV makers must continue to address these questions. We expect that they will.
And when they do, Hankook aims to be firmly established as a leading EV tire maker.
How do you differentiate your EV portfolio from competitors to consumers?
Hankook's iON line is the world's first full line-up of tires developed exclusively for EVs. iON tires are made to bring out the best in high-quality electric vehicles and maximize driving performance. Our iON innovative technology complements the features of EVs and has evolved to optimize their performance.
For consumers, this means maximizing the benefits drivers will get out of their EVs. Further, Hankook has iON tires specifically for EV performance in certain conditions – including those specifically made for winter and summer.
What's more, Hankook Tire is the first company among tire manufacturers to receive the ISCC PLUS certification. The iON line includes two certified tires, including the iON GT (available in the European market), containing 77% sustainable materials. This prominent eco-friendly certification requires verification of the entire production process, from purchasing raw materials to selling products.
What excites you most about the expansion at the Tennessee facility?
The expansion at our Tennessee plant lays the groundwork for us to keep expanding our presence and offerings within the North American market, which is extremely exciting. The Tennessee plant is designed to manufacture products aimed at the high value-added tire in North America and has been built with a focus on innovative manufacturing, which will carry through the expansion phases.
Phase 2 will double the production capacity for Hankook's PC/LT tires, and Phase 3 will enable Hankook's' first U.S. production of TBR tires. Timeline-wise, we expect to begin seeing benefits from these expansions in late 2025 or early 2026.
We are also excited about the chance to provide even more opportunities to our local workforce. Tennessee is home to both our plant and our North American headquarters, and we are eager to continue working alongside the people here to advance regional business and industrial development.
How is the OE side of the business?
Our OE business continues to be a focus, and we are looking to strategically grow some of the current auto makers we work with. What's more, premium auto makers have embraced Hankook's offerings, which is promising. We are currently OE on over 40 families of vehicles and are excited to grow that as production capabilities allow while continuing to balance it with our replacement tire network.
How important is the North American market to the success of Hankook?
North America is a critical market for us and one that we see a strong opportunity in. The Tennessee plant has well positioned us, both geographically and capabilities-wise, to support the growing regional market, as 25% of our global sales are through our North American channels.
What are some of the pleasant surprises in the industry?
One thing about the tire industry is that it is resilient, and we are continuously seeing proof of that strength. At Hankook, continued investment in our production facilities underscores innovation's key role in creating that resilience. Our dealer network is an even bigger piece of that. The strength of the dealer community is what ultimately will ensure success regardless of economic or industrial circumstances.
What kind of trends are you seeing in the marketplace?
We continue to see growth in various sectors of the market. To meet this demand, Hankook is focusing on these key segments including EV, off-road and TBR. We are looking forward to continuing momentum in these areas as these markets keep growing.
Consumers are also demanding more from tire makers — and all manufacturers — on the sustainability front, especially younger drivers (58% of Gen Z drivers told us in our latest Gauge survey that it is important that their tires are made from recycled or sustainable materials).
We expect that the importance of sustainability will continue to grow and have been identifying opportunities to enhance our sustainability practices throughout the product development process.
At the same time, we have to be mindful of the current economic circumstances and understand how they impact our dealers and their customers.
Do you expect to roll out any additional products in 2024?
We have some exciting products coming down the line for our TBR market later this year.
Has Artificial Intelligence (AI) begun to impact business? How are you addressing that?
Globally, Hankook has been making investments to capitalize on the growth of artificial intelligence for some time. In November 2023, Hankook announced its Voice of the Customer analysis system for EVs based on the generative AI platform, ChatGPT. In addition, earlier in 2023, Hankook announced an integrated AI data platform with Amazon Web Services and Snowflake to enhance the performance quality of tires. These continued investments are made to capitalize on the benefits of AI to enhance the manufacturing and R&D processes.
How do you get your customers to embrace sustainability?
In many ways, the importance of embracing sustainability comes down to what drivers are looking for. Our latest Gauge Index survey found that nearly two-thirds (64%) of drivers are likely to purchase tires from a brand known for its sustainability practices. Beyond that, nearly half (47%) are willing to pay a premium for tires that are sustainably made.
What are some of the challenges going forward?
Change in the automotive space is incredibly fast-paced, so it will always be a challenge to ensure we are keeping up with those trends. The growth of technologies like AI, alongside shifting consumer sentiment toward various types of vehicles, creates an exciting opportunity to keep pushing to enhance our innovative development process and develop premium products.
What do you want tire dealers to know about the company that they may not know?
We truly value our dealer relationships. We constantly seek to understand dealers' needs and support them as they bring our products to market. At the same time, our network of partners and ongoing consumer research help us provide new offerings that we believe meet the demand of today's market.
