MTD Mid-Year Q&A: Kenda Continues Growth Trajectory

July 5, 2024

“Kenda is always growing,” says Jimmy Yang, chairman of Kenda Rubber Industrial Co. Ltd. He explains why and how in this MTD exclusive.

MTD: How was the first half of the year for Kenda? What were some of your achievements and challenges in the U.S.?

Yang: I will primarily address this question from Kenda America’s perspective. We will report our global earnings in the future, but Kenda has continued to provide solid and predictable results based on our overall strategies. As industry sellout remains OK - but not robust - in North America due to lingering inflation impacts, our American Kenda operations have been focused on working to find solutions with our customers and overachieve results based on the segment.

Some of the supply chain disruptions that everyone experienced prior to 2023 are returning this summer as the ocean carrier cartel continues to raise prices by limiting supply.

Despite those challenges, Kenda has been able to achieve growth across many of our businesses. The consumer tire business has remained strong, (with) year-over-year growth through May, while some of our specialty segments have been slower due to industry slow-downs, but still remain strong.

MTD: In general, what's your take on the state of tire demand?

Yang: Many consumers continue to experience the effects of inflation, which are stressing their ability to replace their tires in a timely manner with proper products. Kenda is working with our distributors and retailers to adapt their forecasting related to these issues. Our message for value has resonated in this environment and offers retailers opportunities to provide value pricing without sacrificing safety or performance.

Kenda continues to see the market responding to our brand positioning of “Premium Performance at a Value Price,” as long as miles driven remain robust and consumers remain distressed with less discretionary income.

Kenda is often a preferred choice when the consumer wants to maintain high performance and the retailer wants to insure higher margins.

Specifically, we are seeing a very strong response to our new Vezda Touring 4S tire, which provides premium wet and winter performance with an asymmetric pattern and unique tread, utilizing an environmentally friendly silica and soybean oil compound. Retailer and consumer response has shown that the (tire’s) aesthetics are preferred when compared to directional alternatives. We have also found that consumers are responding positively to our positioning as “four season”-capable versus all-weather.

MTD: What impact have PLT tire duties had on Kenda's business?

Yang: Kenda has intentionally established sourcing flexibility for our product segments to allow us to have confidence in our ability to supply products across our global footprint. For the North American market, we source from six different tire facilities in three different countries to be sure to address customer needs.

Government duties can be disruptive, but we have been able to grow our business across all of our segments utilizing this strategy.

Equally important is to be able to anticipate the market needs within each region. We have enabled our regional engineering teams to work directly with sourcing facilities, along with our corporate teams, to provide the best products possible for the Americas.

MTD: Can you bring us up to speed on any investments Kenda is making in its manufacturing facilities and how these will benefit Kenda's U.S. dealers and distributors?

Yang: As many have read, we will continue our expansion plans with an additional expansion adjacent to our current facility producing PCR and LTR products in Vietnam. This will allow Kenda to continue to anticipate its growth in the Americas.

Generally, Kenda prefers to make announcements closer to the time when (they) will influence the effected markets. We are continuing to add personnel across many regions and segments to support our growth. For Kenda America, we have a number of investments and personnel additions that will have a positive impact for our customers and will provide details as we approach implementation.

MTD: Many tire dealers and distributors spent much of 2023 right-sizing their inventories. Has destocking within these channels concluded, based on what you're hearing from your customers?

Yang: We have seen the inventory levels for most of the Kenda products stabilize to reflect demand. This varies across the industry by segment and we see that many dealers have higher inventory of TBR products sourced (from) off-shore based on anticipated duty increases that haven’t happened.

Based on demand, we have also seen that agricultural inventories remain higher than anticipated, along with some evidence in the trailer segment. Both of those segments have impacted our customers’ abilities to buy Kenda in other segments, as we have actually seen lower inventories on several of our PCR and LTR patterns than the market has requested. For example, we continue to see increases in end-user demand for our Vezda UHP MAX KR20A tire in response to (the product’s) very strong performance and value. Our distributors didn’t anticipate this demand and we are working to improve the inventory across our supply chain to support the retailers and our end users.

MTD: Is Kenda in a good inventory/fill-rate position heading into the second half of the year?

Yang: Kenda is in a good position to provide consistent lead times and strong fill-rates across our segments. We currently have slightly longer lead times on our ATV/UTV products, but are working to reduce those to meet the current demand.

For PCR and LTR, our lead times have been very consistent and we have put processes in place for our customers to have this maintained.

Based on the market demand for our positioning as “Premium Performance at a Value Price,” we are working with our distributors to optimize their inventories as we head into the higher demands anticipating the late summer and fall selling seasons.

MTD: Kenda continues to invest in new products, having added to its Vezda and Klever lines. Why is it important for Kenda to maintain a steady cadence of new tire introductions?

Yang: Our team has worked very hard to create a complete product screen which anticipates the end consumer’s demand. We are now developing the third generation of Vezda and Klever products. Our global team knows that new materials and constructions will allow Kenda to keep its promise to provide premium performance. As we see the continued increase in 18-inch-plus rim diameter sales in the Americas, this requires Kenda to match those needs with our Vezda and Klever products.

In the Americas, the teams working with Brandon Stotsenburg (vice president, automotive, American Kenda Rubber Industrial Co. Ltd.) and Tom Williams (vice president of engineering, American Kenda Rubber Industrial) continue to plan the pattern growth for both Vezda and Klever. These products have been designed to have distinct aesthetics to complement their premium performance.

Our team continues to do market research to determine the best fit for products that match our intended positioning, which will not only improves our market share, but also assures that our channel partners will have outstanding margin opportunities compared to other options. The technologies developed for the Vezda and Klever products have been created from the learnings we achieved from the past products and we do similar development for the new Klever patterns, which will be launching this year: the Klever H/T 4S and Klever A/T Trail.

I will continue to challenge our global teams to follow Kenda’s promise to have premium performance at a value price. This allows us to provide our end consumers with the best overall value.

MTD: Two years ago, you mentioned that "depending on the situation," Kenda  "may eventually" have to expand its tire manufacturing capabilities into North America. Is a North America-based plant still under consideration and if so, why?

Yang: Kenda is always growing. We will continue to match our abilities to support that anticipated growth. We have been very pleased with our North American customer response to our programs and products, while asking our Kenda America team to accelerate that growth.

Kenda knows how to be a great manufacturer in North America, as we have several outstanding wheel production facilities to support our businesses. We will continue to keep our plans in place to support our customers and we believe that tire manufacturing in the Americas is a potential opportunity in the future as we grow and anticipate sourcing based on the market environment.

MTD: What can tire dealers expect to see from Kenda during the second half of the year and early next year?

Yang: First, I want to thank all of our OE and aftermarket customers - including our Kenda direct dealers, online partners and our Traction dealers - for their support of Kenda. We have made a commitment to be a great and reliable partner, but we cannot have the market share gains without our customers’ continuing support.

Kenda will try to be a very consistent partner for our distributors and dealers. That means being consistent with our pricing, programs, products and supply chain, (which) allows our partners to trust Kenda when compared to other options.

Kenda will be making additional new product announcements and following the planned launches of our current products, I have asked that our Kenda Americas team continue to work with our customers to grow our brand with tremendous products and good programs.

We will be launching a value-priced S/T radial product soon to support our dealers, as well as the new Klever products I mentioned. We will also have new Vezda products that will support our growth and the anticipated needs for EV demand in the region.

My request to our customers is to continue to support Kenda and reward us for being a good, consistent manufacturer.

About the Author

Mike Manges | Editor

Mike Manges is Modern Tire Dealer’s editor. A 25-year tire industry veteran, he is a three-time International Automotive Media Association award winner and holds a Gold Award from the Association of Automotive Publication Editors. Mike has traveled the world in pursuit of stories that will help independent tire dealers move their businesses forward. Before rejoining MTD in September 2019, he held corporate communications positions at two Fortune 500 companies and served as MTD’s senior editor from 2000 to 2010.