NUEVO VALLARTA, Mexico—Kumho Tire U.S.A. Inc. will open an original equipment office in Detroit Feb. 1 as the South Korean-owned tire firm prepares to announce four OE fitments in the U.S. in the near future.
The office initially will have a staff of two sales engineers and target mid- to high-range fitments with the Big Three domestic auto makers, David Hudrlik, senior vice president of sales, told attendees at the company´s annual dealer meeting, held Jan. 13-16 in Nuevo Vallarta.
"We are committed now to develop OE business in the U.S.—good profitable OE business," he told the dealers. "We are going to sell products that benefit you. We are not going to put the Kumho brand on an entry-level vehicle. We will put them on mid-range to high-range vehicles."
Although no official OE contracts have been announced, Kumho officials told dealers one of the fitments will be a 19-inch tire for Chrysler that will be on a high-end crossover sport-utility vehicle to be introduced in 2008. No information on the other three OE fitments was released.
Hudrlik said Kumho Tire U.S.A. had not pursued OE business in the past because its parent lacked sufficient tire manufacturing capacity to support the business. "All the tires that we received we wanted to make sure we gave to our replacement market," he said. "We have actually turned down talking to every OE manufacturer because we couldn´t support OE and support (dealers) at the same time."
But he released a production forecast at the meeting that showed Kumho´s worldwide tire capacity will rise to 48 million units this year, compared with 44 million last year. Capacity will jump even further in 2007 to 52.4 million, as Kumho´s second factory in China increases production after opening later this year. The South Korean tire maker also has a third factory in China in the planning stages.
"So we now feel we are prepared to aggressively go after the OE market," Hudrlik said.
The Kumho Tire executive said the new Detroit office also will give the firm the necessary "after-service" support to handle any OEM issues that may arise. "As we expand our OE presence in the U.S., we will expand the office as necessary," he said.
The names of the people who will staff the office weren´t announced.
The opening of the Detroit OE office comes as Kumho Tire U.S.A. recorded 2005 sales of $407 million, well above the $353 million posted in 2004 but still short of the firm´s goal of $475 million for last year. Hudrlik acknowledged that fill rates for the first six to seven months of 2005 were sub-par, but the recent opening of a new distribution center in California will help improve the rate this year.
He also set a high bar for 2006, with a goal to hike revenue 25 percent to $505 million. "That is the amount of product we can get for the U.S. market," Hudrlik said.