When will the North American replacement tire segment normalize? Yong Ski-Shin, the head of Kumho Tire’s Americas business region, says it could happen within three months “after shelter-in-place regulations are lifted.”
Kumho is preparing for that outcome by reopening its consumer tire plant in Macon, Ga., which it had shuttered in early-April.
The facility, which opened in 2015, can produce 11,000 passenger tires per day at full capacity, according to MTD research.
During the suspension of production at the Macon plant, Kumho drew supply from its plants in South Korea and Vietnam, both of which are “fully operational,” according to Shin.
“We feel we are in a very good position to service our dealers once the market rebounds. We have not suffered any disruptions to our operations and supply.”
On the OE side, he believes “it will take some time” for tire demand to recover.
“Our OE partners have all shut down their production, so our volume of supply has been significantly reduced – much like all manufacturers that work with vehicle manufacturers,” notes Shin.
“It is difficult for us, as well as our partners, to predict how the pandemic will affect future vehicle sales.”
Changing preferences
Looking ahead, Shin does not foresee any changes to what he calls “product segmentation in the market.
“However, I do see some changes in sales volume that occurs between tire manufacturer tiers. Once the nation has normalized, consumer purchasing behavior will have shifted due to the economic uncertainty this pandemic has caused.
“Buyers who were once accustomed to upper-tier brands will look to more products” from lower tiers, he explains. “We feel that Kumho presents a very good value to the consumer.”
Kumho is preparing its dealers and distributors for this “new normal.”
The company has been “in constant contact” with its direct and associate dealers, according to Shin – “informing them of Kumho’s situation and working together to mutually support each other.
“Our internal communication structure has been strengthened in order to ensure efficiency and maximize our time to enhance our organization and add support for our customers.
“New marketing initiatives and supply chain strategies have been implemented to adapt to consumer behavioral changes and our customers’ needs,” he adds.
Kumho has managed to improve its fill rate levels during the COVID-19 crisis.
However, despite the fact that the company’s global research facilities are operating normally, “some testing of products in the field have been delayed.”
At the moment, Kumho does not have any product launches on the docket.
Last November, the company introduced the new Road Venture MT71, a tire for the growing mud-terrain light truck tire segment. Shawn Denlein, Kumho’s executive vice president of sales and marketing, called the tire “cornerstone product for us.”
Greater engagement
Kumho management is keeping any eye on how consumers who need tires during the pandemic are buying them and have noticed that consumers “have been more engaged in online purchasing of tires,” says Shin.
“With the shelter-in-place orders, the general public has been more online-focused and we see them making more appointments (at tire dealerships) through the Internet.”
This, ultimately, is good for Kumho’s dealers, he notes.
“We will have to see if this behavior continues but within the purchasing cycle, mounting and balancing are necessary.”
