Kim Gran led Nokian Tyres plc’s charge into Russia. Now he is setting his sights on North America.
Gran has been the Finnish company’s CEO and president since 2000. In 2005 Nokian began manufacturing winter tires at its new plant in Vsevolozhsk, Russia. An expansion was announced in 2007, with a goal of producing 10 million tires annually there by 2011.
In 2007, Nokian recorded sales of well over $1 billion. Business in Russia accounted for 31% of that. Sales in Finland, where Nokian’s other plant is located, accounted for 21%. North America represented 7% of sales.
Modern Tire Dealer recently sat down with Gran at the New England Tire & Service Association Trade Show and Convention, where he was the keynote speaker. This exclusive interview centered on Nokian’s aspirations in the U.S. and Canada.
MTD: How would you describe your marketing strategy?
Gran: We focus on value-added production, winter tires mainly. Winter tires make up 83% of the passenger tire production at our two plants. You could say that Nokian is the only company globally that focuses on winter tires.
We’re not interested in Africa and China, or the southern United States, obviously. We aren’t interested in Mexico.
For us, North America is really New England, Colorado, some states around the Great Lakes and then the Canadian side, especially Western Canada and Quebec. We have a good foothold in New England.
MTD: What are your plans for the North American market?
Gran: Based on our track record, we expect to reach sales of $200 million in 2012.
We had sales of $25 million in the U.S. and Canada in 2000. By 2005, we were up to $100 million.
We would have reached $200 million sooner, but we were hit by the fact that we didn’t have enough capacity because of growth in Russia, the Ukraine and Eastern Europe.
We are investing in our factory in Russia, which will increase our capacity in Russia from four million tires annually to seven million this year.
We are not investing in our Finnish plant, but plan to increase our volume by 7% per annum based on process improvements.
MTD: What other types of tires do you produce?
Gran: About 15% of our total passenger tire volume is lower-end, S- and T-rated summer and all-season tires. They are small sizes made in Indonesia and China. In the U.S., Cooper Tire & Rubber Co. has been making some light truck tires for us since 1996. We don’t do white letters or raised white letters ourselves. We also sell truck and agricultural tires and are global market leaders in forestry tires.
MTD: Who do you compete against?
Gran: Globally, the big brands are Michelin, Goodyear and Continental in markets where we are strong. Here in North America, it’s pretty much the same, with Bridgestone and a little more Goodyear.
MTD: What channels do you sell through?
Gran: Our sales principle is that we want to operate through independent tire dealers. We don’t sell to clubs or mass merchandisers. We believe a long-term partnership, where the manufacturer and dealer work together, is the best way.
We believe in selling at a high price, with good margins for the dealer. So we give them exclusivity.
MTD: In Europe and Russia, you run close to 350 company-owned and franchised Vianor tire stores. You also have stores in the Ukraine and Kazakhstan. In the U.S., you purchased University Wholesalers Inc. in Colchester, Vt., in 2005, then Goss Tire Co., a six-store, Vermont-based chain in 2005. Do you plan to add more dealerships in the U.S.?
Gran: We started to do a test with retail in the U.S. when we bought Goss Tire to see whether our retail concept would work here. For us, it’s not owning the shop that’s important, but partnerships and logistics.
We hope to build a network of our own and partner shops in New England.
We are trying to expand our franchising. We won’t set up a shop if one of our existing dealers is against it.
MTD: How many stores do you want to have worldwide?
Gran: We will have slightly more than 500 stores by the end of the year. We want to have 1,500 stores by the end of 2012.
Since the interview, Nokian Tyres purchased Concord Tire & Auto Service Inc., a one-store independent dealership in Concord, N.H. It has been renamed Vianor Concord.