Kumho Tire USA Inc. started the year focused on communication with its customers, unveiling a new dealer portal and website. When the coronavirus pandemic hit, the company strengthened internal communications and found other efficiencies to better serve customers. Kumho said it "shifted gears smoothly," and the company is poised to grow through competitive pricing and its unique social media marketing.
Q. How would you describe business thus far in 2020?
A. Our business has been down due to the pandemic and "stay-at-home" orders, but we are seeing vast improvements through the month of May.
Q: How has the company reacted to COVID-19 pandemic?
A. In light of COVID-19, our company has shifted gears smoothly to ensure efficient functionality. We have implemented changes to our logistics operations, customer programs and marketing efforts to adapt to consumer behavioral changes and our customer's needs. Our internal communications structure has been strengthened in order to maximize our time to enhance our organization of operations and added support for our customers.
Q. Do you expect any supply difficulties in the second half of the year?
A. We have not suffered any supply issues during the span of the current pandemic and do not foresee any limitations in the future. Our overseas plants and the Macon, Ga., plant are fully operational, and we have strategic plans in place in order to avoid any issues with supply. We feel that we will be able to capitalize on our strong fill rates moving forward.
Q. What type of practices has Kumho implemented in response to COVID-19?
A. For their safety and the safety of their families, the majority of our team has been under "work-from-home orders," which we are now reviewing our actions for continuing with implementation or a modification of that order.
Q. What are some of the pleasant surprises you are seeing in the industry?
A. We are seeing some normalcy trending over the past month in our industry where our customers are getting back to their regular schedules and retail locations gaining more consumer traffic.
Q. What is Kumho's reaction to the USW antidumping (AD) and countervailing (CV) duties petition on passenger and light truck tires made in Thailand, South Korea, Taiwan and Vietnam?
A. Since the opening of our Macon, Ga., plant in 2016, we have been reducing the total import volumes from Korea and Vietnam by transferring production to Georgia when possible. We are also mainly sourcing products that are not feasible to produce in the U.S. plant from our overseas facilities. For these reasons, we do not believe that we will be subject to the AD/CV duties and have documentation to provide to the DOC (U.S. Department of Commerce) and/or ITC (U.S. International Trade Commission).
Q. How might additional duties impact the industry?
A. Roughly 50% of the total tire supply (both RE and OE) are produced in the U.S., with the other half coming from imports. Unless domestic tire plants achieve a breakthrough in terms of increasing their efficiency and capacity, tire importation is inevitable. Imposing additional tariffs will naturally lead to increase in market prices, and should the government move to impose an increase of tariffs at 10% or more, Chinese manufactured products may gain more favor in the market.
Q. Where do you see industry markets heading in the last half of the year?
A. We will see the industry continue to normalize throughout the second half of 2020. The extent of that normalization will be determined by the course of the pandemic and the confidence level of industry professionals as well as consumers.
Q. What kind of trends is Kumho seeing in the marketplace?
A. We are seeing some welcomed normalcy come to life in the market and are continuously working to make sure that we are fully available to support our customers.
Q. What sectors look to be strong? Are they sustainable for the future?
A. We see "challenger brands" like Kumho gaining more market share within the industry. Value brands have and will continue growth as consumers are looking towards products that are reliable but will not have a higher impact on their budgets.
Q. What sectors are struggling?
A. With consumers reluctant to make large purchases at this time and brand names becoming more irrelevant in buying decisions, we see higher tier manufacturers suffering the effects.
Q. Do you expect to roll out any additional products in 2020?
A. We currently do not expect to officially launch any new products in 2020.
Q. Do you foresee any price hikes in the second half of the year?
Q. Do you expect any major investments in the next six months?
A. Kumho had invested in two large projects, new dealer portal and website earlier this year, but are currently not planning on any other major investments that are not necessary at this time.
Q. How has the vehicle manufacturers' move to light trucks, SUV and CUVs impacted your product mix?
A. We have solidified our LT/SUV/CUV products and size lineups to ensure that we have full coverage of products needed in the market and will continue to shift as the industry changes.
Q. How has the UHP market fared in light of the proliferation of LT, SUVs and CUVs?
A. The UHP market has continued to increase even with the growth of LT/SUV/CUV. With vehicles being manufactured themselves towards performance, tires need to be tuned to match the level as well, so there is even more growth potential in the segment.
Q. What is your online strategy?
A. We are continuing to evolve our brand in the online landscape. We have just launched our new dealer portal and website in 2020 to communicate with our dealers and consumers effectively. New measures on both sites have been taken to ensure that information is readily available in a user-friendly environment.
Our marketing initiatives also heavily place activations around social and digital media, especially around our sports marketing efforts with the NBA, USA Basketball and NBA G-League partnerships. Social influencer marketing is an area where you will see Kumho continue to grow as well.
Q. What are some of the challenges of the industry going forward?
A. COVID-19 has had an impact on consumer behavior moving forward. The consumer will be more comfortable with online purchasing as well as scheduling appointments in advance. Our industry will need to adapt to these changes in order to be competitive in the market.