LOS CABOS, Mexico—Hankook Tire America Corp. is determined to increase its business despite the economic downturn, and urged its dealers to do the same.
“Survive or thrive” was Hankook's theme for its recent dealer meeting in Los Cabos, and Hankook gave its 59 retailer and 19 wholesaler attendees a snapshot of its own performance of thriving in a recession.
President Greg Pae lauded the Wayne, N.J.-based tire marketer's successes in the past year, including increasing its U.S. tire sales 6 percent to $702.6 million.
Much of that jump came from the replacement market as sales rose 7 percent to $569.6 million, compared with OE, which increased 1 percent to $133 million.
Even as raw material and energy costs surged and new vehicle sales plummeted, Pae said Hankook made its largest gains in the touring, ultra-high-performance, light truck and medium truck tire segments. The parent company, South Korea's Hankook Tire Co. Ltd., did postpone construction of a sixth tire plant, in Southeast Asia, as the world's economic slump hit tire demand.
Although industry analysts are forecasting lower OE and replacement tire sales this year, Pae said his goal is for Hankook Tire America to achieve $800 million in sales in 2009 and surpass $1 billion by 2011. He said Hankook dealers are “ideally suited to ride out this down market” as consumers replace their tires over the next year.
“Many customers who are used to buying first-tier brands will be willing to spend extra time to find the same quality of tires while spending less,” Pae told attendees. “For these customers, Hankook is the obvious choice.”
In anticipation of replacement tire demand, parent company Hankook Tire Co. Inc. continues to invest more than 5 percent of its annual revenue in research and development, he said.
The company also has upgraded services to dealers, such as expanding capacity at its U.S. warehouses and reducing delivery lead times to three days.
Last year, the company opened a 300,000-sq.-ft. distribution center in Aurora, Ill., and already in 2009 has added 70,000 square feet to its Rancho Cucamonga, Calif., facility and 75,000 square feet to its Edison, N.J., warehouse, according to Bill Bainbridge, director of brand communications.
Good products and good customer service are keys to thriving in a downturn versus just surviving, Bainbridge said.
To that end, Hankook has made available a Web-based ordering system for dealers to simplify the ordering process. The company also rolled out an online sales training program that educates dealers and their salespeople on the Hankook brand.
Bainbridge previewed Hankook's advertising strategy for 2009 and said the company will continue to develop national impressions through auto enthusiast magazines, sports publications and home plate signage at major league baseball games.
Following the meeting, Bainbridge said that sports continue to pose a good advertising venue for Hankook because when manufacturers are associated with professional sports, “there's a propensity for consumers to favor that manufacturer” and its brand.
The company will spend nearly $2.85 million on consumer print advertising this year, he said.
The Internet is another avenue Hankook hopes to use as a marketing tool, he said. Besides banner ads on the Web sites of print publications, the company also is looking at keyword placements on popular search engines that drive Web surfers to Hankook's dealer locator, according to Bainbridge.
In the broadcast realm, the company will give dealers co-op dollars to use for radio and TV ads in their markets, he said.