“We’re eager to cement ourselves as a top tier-two manufacturer,” Shawn Denlein, Kumho Tire USA’s president of sales and marketing, said during Kumho’s dealer meeting.
The way Kumho will get there is through continued investment in product quality, logistics, brand equity and its distribution network, Kumho officials told attendees during a Dec. 7 presentation. (Kumho’s dealer meeting took place in St. Thomas, in the U.S. Virgin Islands.)
Kumho Tire USA is wrapping up a banner year that will see its sales increase by double digits, Nam Hwa “Ed” Cho, its CEO, told dealers.
“Kumho is becoming a top tier-two brand,” said Cho. “We are determined to take this path.”
Product simplification
“There are four things you have to have in terms of cementing yourself as a tier-two manufacturer,” said Denlein. “You have to have quality products. You have to have a brand strategy. You have to have world-class logistics, particularly in today’s environment. And you need profitability - not just for yourself, but for your distributors. This is what gets us to the next level.”
Kumho has made a concentrated effort to consolidate its product lines, which has proven to be a successful strategy, according to Denlein. “We’ve taken every single product where we had multiple treads and we’ve built one tread,” he told MTD during the meeting.
Denlein cited the Kumho Solus TA51a as an example. “We took three treads – the TA11, TA31 and TA71 – and (combined) them into the TA51a. Consolidating down into one line really simplified the lineup from an inventory perspective – not only for us, but for the dealer and in reality, the retail salesperson behind the counter. There aren’t multiple treads on their screen.”
Kumho also is investing in new products, including an all-weather tire, the Kumho Solus 4S HA32, which will hit the market in January 2024. The tire initially will be available in 26 sizes “and then in the middle of the year, we’ll come out with the remaining sizes.”
The Solus 4S HA32 is Kumho’s first entry into the all-weather segment. “We expect all-weather to exceed 6% of the (consumer tire) market in 2024,” said Denlein. “That’s substantial and as I look at it, an opportunity for continued growth.”
In addition, Kumho will introduce a rugged-terrain (R/T) version of its popular Road Venture light truck tire in 2025. “It’s a cross between a mud-terrain and an all-terrain.”
The overall R/T segment, according to Kumho estimates, sits at around two million units, making it another high growth potential segment for the company.
Denlein told meeting attendees that “a lot” of its consumer products for the U.S. market “are now being generated and led by our Akron (Ohio) research and development facility,” which is one of Kumho’s five tech centers worldwide.
When asked about Kumho’s TBR program, Denlein told MTD that “we’re looking to get more supply and we’re also in the beginning stages of formulating a team” for TBR.
Kumho’s TBR products sold in the U.S. are made in South Korea “and production is limited. We get our share of supply. Europe gets its share of supply. And then the domestic market gets the lion’s share. We max out our supply” in the U.S. every year.
Strong logistics
Kumho’s fill rate “was not good last year,” Denlein told dealers. “When COVID-19 (struck), we were one of the few companies that actually had product, but then it caught up with us and we ran out.”
Fill rates have since dramatically improved. “Right now, we’re forecasting it to be around 84% to 86%. It’s moving in the right direction.”
Kumho’s global, annual manufacturing capacity is 62.4 million units. Previous capacity was 57 million units, said Denlein.
Most of the company’s U.S. replacement channel tires are built in Vietnam. (Kumho has eight manufacturing plants worldwide.) The Vietnam plant, Denlein revealed, “is producing 12 million tires,” double its production rate at mid-2022.
“We’re getting a larger share of our (U.S.) product from Vietnam,” with Kumho’s South Korea plants making up the difference.
“Our Vietnam plant had a lot to do with” fill rate improvement, Denlein told MTD. He added that Kumho is producing “less replacement products out of Macon, Ga, and we’ve moved molds to Vietnam,” leaving the majority of the Georgia factory’s production devoted to OE tires.
However, that doesn’t mean Kumho is freezing investment in the Georgia plant. Denlein said the company will add 500,000 units of production at the eight-year-old facility next year, increasing its annual production from 3.2 million tires to 3.7 million tires.
Globally, the company will continue to invest in more production. Kumho is planning “to build a smart factory in Korea in 2024” that will manufacture electric vehicle tires, as well as “premium”-level tires. The latter products will be slated for the OE channel. “We also will be adding a plant, in the near future, in Europe.”
To help get products to U.S. customers, Kumho recently opened a new distribution center in Dallas, Texas. The facility is designed to “take the stress off” the company’s two other U.S.-based warehouses, which are in Rancho Cucamonga, Calif., and Atlanta, Ga.
The Dallas distribution center “will be fully functional” by the end of this month and will expand Kumho’s capacity by an extra 500,000 units.
“We’ve also moved our entire logistics staff to Atlanta, which is important because we’ll have more synergies,” said Denlein.
During the dealer meeting, he also touched on Kumho’s OE strategy, revealing that the company has picked up new fitments. Right now, Kumho has 15 OEM partners, encompassing 54 models and 103 SKUs.
“Nissan is a good example” of Kumho’s recent OE channel growth, he noted. “Volkswagen is a good example. We still do Kia and Hyundai. Over 30% of our business is OE. It’s a brand awareness thing, too. There are other brands that don’t have the impact that we have at OE, so for pull-through, it definitely helps.”
Distribution strategy
“Another area we’ve focused heavily on is retail, which fuels everything,” Denlein told MTD. “In 2022, 51% of our business was retail. Now it’s almost 66%, which is a huge increase when we talk about volume.”
In the U.S., Kumho has added 80-plus customers since 2018. “That would be retail and wholesale,” noted Denlein. (Some of the country’s largest tire distributors and dealerships - including K&M Tire Inc., U.S. AutoForce LLC, Discount Tire, Dunlap & Kyle, Tire Discounters Inc. and others - sent representatives to Kumho’s dealer meeting.)
Denlein said Kumho’s dealer channel growth “equated to over a half-point of gain in market share this year, which is pretty substantial.”
The company continues to grow its Fuel associate dealer program, which has more than 2,000 members. While Kumho is happy with that number, company management is more focused on how well members comply with the program’s requirements, according to Denlein.
“Compliance rate is what we focus on,” he told MTD. “Number of dealers is important, but you don’t want 5,000 dealers and 25% compliance. We have five tiers” of the Fuel program. Dealers must “at least” meet the program’s tier-one requirements to be considered compliant.
Denlein said that when he joined Kumho in 2018, the company was focused on “opportunity buys – (or) deals, toward the end of the month, to drive some volume. The program was very good, but too complex.”
Kumho has replaced that approach with “program buying. The majority of our purchases from our dealers are on-program. We’re also more aggressive in terms of the programs we offer. We’ve been more aggressive in terms of promotions.” (On the consumer-facing side, Kumho “is looking at” doing two rebate promotions in 2024.)
When asked if Kumho is where it wants to be in terms of distribution, Denlein replied that the company "is more focused on the approach of looking for more stable, strategic partners. There are areas of the U.S. where we’re under-indexed and in areas where we over-index, we’re a little more careful because we want to be a good partner and want to have reasons why we added distribution. There has to be a plausible reason why” we’re adding distribution.
Brand positioning
After a lengthy absence, Kumho returned to the SEMA Show in November, with an outdoor booth that emphasized the company’s light truck tire line. “The booth was outstanding,” said Denlein. “We gave away a Jeep Wrangler and had almost 4,000 entries. We put that into our social media strategy.”
Kumho management has been pleased with the number of impressions its social media platforms have generated. The company is successfully using memes, which are often-humorous graphics that are shared virally by Internet users. And Denlein said Kumho will continue to use influencers in its social media outreach.
“Our target audience is 18 to 34 (years of age) roughly, so we’re trying to touch that consumer who probably doesn’t have a tremendous amount of identity when it comes to product. We’re trying to diversify ourselves in our messaging."
Kumho’s target customers “buy what they see and buy what they’re influenced by,” he told MTD. “If I’m someone who does a lot of research” before buying a product “and I look at certain influencers in (that) space and I see someone say something good (about a product), I’m following that person. We’ve really heavied up” on influencers.
Kumho also is sharing content with its dealers, said Denlein. “We don’t have an ad budget like other (tiremakers), so this is a very cost-effective way to connect with our audience.”
The company has two more years on its sponsorship deal with the National Basketball Association (NBA), a platform that “has been very good for us. The NBA has the youngest audience of all major sports. And we can pretty much activate all year, with the exception of four or five months.” (Former NBA star Bruce Bowen was the special guest speaker at Kumho’s dealer meeting.)
“Another reason for our success is we’ve become extremely collaborative with customers and we’ve also been good listeners,” said Denlein. “Everything we’ve heard from our customer base, we’ve acted on. In the past year-and-a-half, we’ve really centered on what we want to do” with the Kumho brand.
