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January 28, 2008 01:00 AM

Kumho adding production capacity to help move up in rankings

Vera Linsalata
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    RIO GRANDE, Puerto Rico — Kumho Tire Co. Ltd.´s sales jumped 10 percent in 2007 to $2.4 billion and the company is adding production capacity, keeping with its goal of becoming the fifth-largest tire maker globally by 2015.

    Kumho Tire U.S.A. Inc. executives gave a report card on the company´s performance worldwide and in the U.S. and a glimpse of its future direction during the firm´s annual dealer meeting, held Jan. 12 in Rio Grande.

    In the U.S., Kumho saw its sales surge 22 percent to $565.5 million, a $100 million increase from 2006, according to David Hudrlik, senior vice president of sales for Kumho Tire U.S.A.

    About 10.1 million units were sold in the U.S. in 2007, and 9.9 million of those were sold in the replacement market, Hudrlik said. He said 2007 unit sales increased 1.8 million units from 2006. The firm´s replacement market shares in America are 5 percent in passenger tires, 1 percent in light truck tires, 8.1 percent in high-performance and 5.6 percent in ultra-high-performance tires.

    Hudrlik said Kumho´s global tire capacity amounts to 60 million tires, and that´s not counting a medium truck tire factory in Nanjing, China, and a light truck tire facility in Vietnam, that will start up this year. By 2012, Kumho plans to attain a global annual tire capacity of 93 million units.

    Brennan said for Kumho to reach the No. 5 spot globally, the company would need to sell a projected 17 million units in the U.S. and achieve $6 billion in sales worldwide by 2015.

    In 2008, there will be no changes in passenger tire supply to U.S. dealers, but light truck tire supply should increase by 1 million units as Kumho´s Vietnam plant comes on stream at the end of the first quarter, Hudrlik said.

    The company´s future direction and its plans to augment capacity levels should mean better fill rates for tire dealers, Tom Bowman, vice president of the commercial division for Allen Park, Mich.-based Belle Tire, said at the meeting.

    Bowman said he is pleased with Kumho´s goals and thinks the tire maker definitely will overtake other manufacturers to reach the No. 6 or 7 spot in tire sales by 2015.

    The tire maker had announced at last year´s Specialty Equipment Market Association show that it is considering sites in the U.S. to construct a tire manufacturing facility, with Georgia and Alabama as the top contenders. However, at the Rio Grande meeting Hudrlik said an agreement to build a plant has not yet been signed.

    Kumho also has gained an original equipment fitment in North America, on the upcoming 2009 Dodge Journey crossover vehicle, Hudrlik said. The tire maker expects to sell 400,000 units of its Solus KH 16 for the Journey in three sizes: 225/65R17, 225/55HR19 and 225/55TR19.

    "We´re concentrating on the U.S., but responsibly," he told dealers. "Our No. 1 priority is the replacement market."

    Chrysler L.L.C. wants the Journey to be a premier seller and will make a significant marketing investment in the vehicle, Hudrlik said, and Kumho is supplying the auto maker only with excess capacity and not taking supply away from dealers.

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