Mutual Profitability Is Top Priority, Hankook Tells Dealers

Jan. 29, 2024

Rob Williams, president of Hankook Tire America Corp. wasted no time grabbing the attention of roughly 50 key customers at Hankook's recent Partners Day event in Riviera Maya, Mexico.  

“Let me be clear,” said Williams. “We need to make a profit and you need to make a profit. That’s what a true partnership is all about.”  

He then moved forward with discussing the plans Hankook has in place to do that.  

Williams first pointed to the $1.6 billion investment that Hankook is making in its Clarksville, Tenn., plant, doubling its capacity to 11 million units by 2027, including a new, million-unit-per-year TBR capacity. The U.S. plant will increase production with a start-up in late-2025 and early-2026.  

“Today, our mix at Clarksville is roughly 60% for OE and 40% for replacement – maybe higher as OE demand increases”, he said.  

Williams told dealers that the investment in the plant means Hankook has big growth expectations in the U.S. Currently, he said, North America accounts for 23.6% of total sales for Hankook worldwide.  

Full capacity typically will take a couple of years, Williams told MTD. When completed,” Hankook will be the largest non-government employer with over 2,200 employees in Montgomery County in Tennessee.”

He added that the company is taking its social commitment to the community very seriously.  

In addition to the Clarksville plant expansion, he said Hankook late last year announced an $800 million expansion of its Hungary plant that will allow better flexibility and sourcing of products. Williams emphasized that the quality of Hankook’s tires are consistent, no matter which plant or country has produced them.  

The plant expansions are part of the company’s ST5 2030 goals, in which Hankook wants the following:  

  • To become the world’s fifth largest tire manufacturer with sales exceeding $13 billion by 2030 with a capacity of 150 million units per year. (MTD currently places Hankook at number seven globally, at $6.8 billion); 
  • Be the number one tire maker in electric vehicle (EV) tire technology and number three in overall technology;  
  • Move Hankook to tier-one in brand recognition, with its Laufenn and Aurora brands viewed as tier-two brands, and; 
  • Achieve EBITDA margin of more than 20%, with operating profit above 10%., 

Product offerings were another area that Williams said would help the company achieve its goals. The company introduced its Kinergy XP tire at the meeting, as well as its Dynapro HPX,  introduced last November, as two examples of new products.  

“We will continue with new and innovative products. We need to be responsive to what our dealers are requesting,” Williams told MTD in a one-on-one sit-down interview during the event.  

Williams told dealers that “Hankook is the leader in the EV segment” with its iON line of tires. He said the company will continue to promote and move forward in the EV tire segment.  

On the TBR side of the business, Hankook plans to launch new tire lines in 2024, the first new products in two years, as well as key line expansions.  

  • Smartline AL52 a premium long-haul tire with enhanced wear over the AL21 to have development completed in July. This effort includes: 
  • SmartFlex DL15+ a long and regional haul size expansion to include 11R22.5 and 11R24.5 in February;  
  • SmartFlex AH51 low rolling resistance long and regional haul tire in third quarter, and;  
  • SmartFlex DH52 regional haul low rolling resistance for compliance with U.S. Environmental Protection Agency Phase 2 standards in May. 

In looking at the TBR market, Williams said 2021 and 2022 years were unprecedented growth years for commercial truck tires, but nobody thought it would continue, which it didn’t. He told dealers the total replacement market was down 24% in 2023, but Hankook had only decreased by 17%.  

While admitting that domestic supply on the TBR side is still three years away, Williams explained his company’s reasoning for still working closely with OEMs. “We believe fleets buy from the same tire makers whose tires came on the truck.”  

Williams said Hankook officials don’t have a great understanding of demand for 2024 yet, but are expecting it to be flat with 2023 numbers.  

In looking at Hankook’s relationship with its dealers, Williams said, “we want to be easy to do business with. We must have the right inventory in the right place at the right time.”  

Currently, Williams said “our inventory is close to capacity for the U.S. on the replacement side, with fill rates in the 85% to 90% range. Our SKUs are hiking, with the exception of some LT sizes that had been coming from the Daejong (South Korea) plant. Fill rate is no longer a problem. 

“We must be on the ground with you - no virtual sales meetings,” he added. In return, Hankook is looking for growth in market share with its existing customers.  

Williams told MTD his main message to dealers is that “truly, our growth ambitions with phase two and three plant expansions are unlike any other manufacturer. And the only way we can reach those growth aspirations is to grow with our dealer partners and to truly understand what their go-to-market strategies are and to join them to make sure our product is truly benefiting their growth.  

“We must grow our share with our current dealers and look at growth with new dealers in strategic areas where we have lower market share than what we aspire to have. Our growth ambitions are very strong and we need our dealers to help us. 

“Our team has to be there for our dealers. We need to train them, support them and be out in the field. This is where we stand out. We have a veteran salesforce. Today, what happened was a launch. The real magic is when I get my team with (Hankook customers’) teams and they sell the product. Our new training program is where we want them to go to get to sell Hankook products, whether it is online or in person.”  

An example of working with dealers is the company’s lowering of the sales brackets of its Hankook One associate dealer program. The program currently has roughly 4,000 members.  

“We want our aftermarket programs to help our dealers sell out the Hankook brand. Additionally, our car dealer program is also very aggressive ... to have our dealers sell to the car dealer channel and have been growing that. On the commercial side, we’ve increased our rebate program to sell out there, as well.” 

K.C. Jensen, newly appointed vice president of PC/LT sales, told dealers that Hankook was going to run counter to other companies by increasing its number of regions from three to four, “which means we will have more boots on the ground.”  

He acknowledged the inventory issues during the past year, but said sell-in sales improved in the second half of 2023. However, sellout recovery speed is still slow.  

“We are going to be as transparent as possible moving forward,” Jensen told attendees. “You are our representatives in the field and you know what is going on.”  

Joking that with more tires being produced in the U.S., “the pressure is on,” Jensen also told dealers the company has strong brands in Hankook and Laufenn, with the full intent to grow both.  

He said that the company is putting more resources in place to police its MAP program, acknowledging the pricing that both Amazon and Walmart have displayed.  

“We are dealer-focused and we need to earn your trust,” Jensen said.  

Brooklyn Emery, brand communications manager for Hankook Tire America Corp. outlined key initiatives the company is engaging in at the consumer level.  

Globally, Hankook is sponsoring the Formula E racing series.  

For the U.S. market, Hankook will continue its signage program at Major League Baseball (MLB) stadiums across the U.S., although it is no longer going to be the official baseball sponsor for MLB.  

Emery also told dealers that Hankook led the industry in 2023 with its share of voice for EV tires. The company used its iON launch, two EV focused consumer events and the SEMA Show - coupled with an on-going EV focused social media campaign - to achieve this goal.  

For  2024, the company will continue consumer events and social media and will supply dealers with more point-of-sale promotional materials.