Hankook Tire executives announced a strategy to bring the company within the top five tire manufacturers in the world during its Partner’s Day meeting held this week in Riviera Maya, Mexico.
According to Hankook Tire North America President Rob Williams, Hankook ranks seventh in global tire sales and sells tires in about 160 countries. Global sales revenue as of 2022 was $6.2 billion, and the company has a production capacity of 102 million units. Today the company employs approximately 22,000 people and has seven regional headquarters, five R&D centers, eight manufacturing plants and 36 local subsidiaries.
An integral cog in the company’s growth strategy involves Hankook’s 2023 announcement that it will invest $1.6 billion into a multi-phase expansion of its Clarksville, Tenn. tire production plan. The groundbreaking for Phases 2 and 3 will be this year, and Phase 2 and 3 production will begin in 2025. The expansion will bring total production capacity at the plant up to 11 million units, up from today’s 5 million. Ten million of these will be PLT tires and 1 million will be commercial truck tires.
In addition, Williams told dealers that the company’s tire plant in Hungary will be adding TBR production, and Hankook hopes to reach an 800,000-unit capacity per year there upon the tire line’s expected completion in 2027. Williams said this will allow the TBR products produced in the Tennessee plant to remain stateside. The company can also source products from South Korea and China on the TBR side and Hungary on the PLT side into the U.S.
“Let me be clear, it doesn’t matter where we make the product, whether it’s China, Indonesia or Tennessee. It’s the same quality,” Williams said. “We make sure we have the same rigorous standards no matter where that product is made. If you’re getting product from any of our plants, rest assured you’re getting the most innovative, highest technology product that Hankook makes.”
Williams listed an additional four other goals to achieve by 2030 as well, calling the company’s ambitions “ST5 2030.” Added to the goal of becoming a global top-five tire manufacturer were bringing overall capacity to 150 million units; transforming the Hankook brand into a top-tier brand; being named a top-three tire company in technology and No. 1 in EV tires; and bringing its EBITDA margin to 20% with a 10% operating profit margin.
PLT tire strategy
KC Jensen, vice president of sales for Hankook Tire North America, detailed the company’s upcoming vision for PLT sales, which includes MAP management enforcement, proactive communication, being more competitive and attractive, and leveraging Hankook’s product portfolio, which Jenson called well-balanced.
Jensen said PLT tire shipments into the US remained flat in 2030, however, the light truck segment declined and vehicle age is rising. He told dealers that it is Hankook’s goal to have the PLT inventory available for them at the right place and at the right time to help them stay competitive in their markets.
Another way the company’s leadership plans to make Hankook more competitive and attractive to dealers is by making changes to the company’s ONE dealer program, Jensen said. All levels of tires that must be purchased have been adjusted to help dealers maximize payout, he said, and the company is also beginning to integrate advanced management through sales tracking system applications.
“What this basically means is that we are going to have full visibility on where you are on a day-to-day basis,” Jensen said. “We’ll know where you need to be and how you’re going to be able to hit your goals.”
Another important aspect of the company’s PLT strategy is successfully highlighting Hankook’s well-balanced portfolio and new products to consumers, Jensen said, nodding to the company’s two recent releases of the Kinergy XP (replacing the Kinergy GT) and the Dynapro HPX (replacing the Dynapro HP2).
“We need to do better when we launch our product to make sure you have the resources available, that you know what the predecessor is, and that we get your pricing there on time. We need to make sure that you’re prepared before we launch this product,” he said. “I believe we have one of the best product portfolios in the market.”
Four brand-new TBR tires in 2024
Hankook is planning to debut four brand-new TBR tires in 2024.
The first is the SmartLine AL52, a premium long-haul steer tire with an improvement in treadwear over the company’s previous iteration, the AL21.
The second is the SmartLine AL50, a long-haul tire with a lower profile developed for car-carrier applications.
“Today there are only a few manufacturers that have this product,” Williams said.
The third is the SmartFlex AH51, a long-haul and regional-haul all-position tire for the US market designed with low rolling resistance and high mileage debuting in a variety of sizes, including a 385/65R22.5.
The fourth is the SmartFlex DH52, a regional haul tire with improved rolling resistance for compliance with OE EPA Phase 2.
Hankook is targeting a release of Q2 or Q3, 2024 for all of these products. The company is also adding additional sizes, such as the 11R22.5 and 11R24.5, to its SmartFlex DL15+, a drive axle tire in 2024.
TBR tire strategy amid 2023 market whiplash
Williams recognized the challenges that commercial tire dealers faced last year due to the whiplash caused by the supply chain attempting to straighten itself out. According to Hankook’s data, the overall truck and bus market in 2023 was down 24% year-over-year. In part, this was due to excess demand from fleets in 2021 and 2022 combined with a very tight supply in the US. On top of this, supply bounced back at the start of 2023, overwhelming dealer warehousing.
Hankook was not immune to the market’s commercial tire supply chain struggles, but beat the overall market, being down 17% in sales in this category last year.
“We kid around and say that we were the best loser because we actually outperformed the market. But, to be clear, that’s not what we aspire to. We definitely need to continue to grow,” Williams said. “At the beginning of the year, all of the imports just flooded in, and everybody had an overload of commercial product coming in on a lot of your Tier 3s and your Tier 4s. You probably had a product that you truly didn’t have a home for. At the end of the day, a product sitting against our warehouse or your warehouse is not good. The only way we really turn that into cash is for us to get it sold.”
Tariffs on import tires entering the US also had a great effect on supply, with 2022 hitting an all-time high, especially due to a glut of product arriving from China and Thailand. Williams said Hankook’s plans to ramp up production at its Tennessee factory will help dampen the effect of tariffs on the company, which currently sources product mainly from South Korea and a small amount from China.
“We realize that the tariffs may come and they may go, but the one thing we can guarantee is that when you make product here in the US, you don’t have to worry about the tariffs. We can control production, we can control distribution,” Williams said. “We’re still about two years away from that, so in the meantime we’ve got to work closely with you to make sure we continue to get the product you need on your shelf, and more importantly, to help you sell it out.”
Speaking in terms of Hankook’s commercial OE share, Williams says the company will continue to chase opportunities in the marketplace. The company recently picked up an OE fitment with Hino, with Hankook Tires becoming original equipment on nearly 50% of their vehicles rolling off the line.
Williams said the USTMA – an organization with which he holds a spot on the board – hasn’t made a confident prediction on what the state of the TBR market in the US will be in 2024, but some indicators suggest it will be a more positive year than 2023. For instance, overall truck sales are expected to stay flat or rise this year as new truck production ramps up in 2025.
“A lot of the vehicles are continuing to age out. People have been putting off those purchases and now they’re going to have to look at making those vehicle purchases,” Williams said. “In terms of Class 8 … a lot of fleets have actually gone out of business. It doesn’t necessarily mean that there are fewer miles being driven, there are just fewer trucks on the road, and I think we know that’s a direct correlation of the fact that there are fewer drivers. So, what do we really expect to see in the truck market in 2024? If you ask Hankook, we’ll basically say flat to last year, or maybe up a little bit based on if the miles driven continued to go up with some of the new vehicles coming in.”
Williams said Hankook has “aggressive goals” for its TBR business vision over the next three years. This includes TBR unit volume up to 2 million units annually, accomplished mainly by increasing production between the company’s Tennessee and Hungary tire manufacturing plants. Another is to grow the business’s national accounts, which currently stands at roughly 20%. He said another goal is “to continue to come out with new and innovative products.”
“There are some products in Europe right now that we’re testing that are EV-related on the truck tire side,” Williams said. “We have to continue to make sure we get a better low-rolling resistance product. We feel very confident we have a total package when we look at our truck product portfolio.”