SEOUL, South Korea—Hankook Tire Co. Ltd. has set its sights on further growth as part of its strategy to become a “top tier” tire manufacturer by 2020.
Currently ranked seventh in the world, Hankook announced at a press event Oct. 18-19 its ambitions to be one of the top five global tire manufacturers. To achieve this, the new Clarksville, Tenn. production plant will be a major contributor to the growth, Seung Bin Lim, Hankook global marketing vice president, said.
During the first phase of this growth, Hankook plans to produce roughly 5.5 million tires a year at its Clarksville facility, which mainly will supply to the Mercedes and BMW manufacturing sites in nearby states.
“We are currently supplying those plants from Europe,” explained Felix Kinzer head of corporate communications, Hankook Europe.
The company expects the Tennessee plant to be operational in April, roughly six months later than previously announced. Once online, the U.S. plant will free up capacity within Europe while providing further opportunity for growth within the Americas market.
Hankook is planning to expand the Tennessee facility through two additional phases to meet demands of the market.
The Seoul-based tire manufacturer expects production capacity to reach 135 million units by 2020, up from 103 million units presently. To that end, it is considering five locations for a new plant, potentially Mexico, Brazil, Middle East, East Europe and Russia.
The prime candidate, according to Kinzer, is the current production site in Hungary which has room for further expansion. If that is the case, the added capacity will be mostly focused on the TBR and LTR tire segment, he added. The two segments currently hold 5 percent of Hankook's production each, a figure Hankook is keen on increasing.
“A current that we are now observing is a change by automakers to eco-friendly cars like hybrid or electrical vehicles,” said Bryan Woo, senior vice-president and head of global OE division.
With the change of the landscape, he said, Hankook also has to change plans. The company is now developing and producing tires for this segment, which requires further development of new materials and technologies.
Another key market where Hankook is aiming to see improvement is the SUV market which has had a steady growth globally.
“The SUV market is now growing explosively, particularly in the Chinese market and the European market,” Woo said. “… We are now working on partnerships with SUV-makers, such as Porsche Macan and BMW X5 and X6.”
Hankook has been investing in marketing of its tires as a premium brand, focusing on soccer in Europe and baseball in the U.S. and Asia. The marketing budget of the tire maker has grown from 3.5 percent of revenue in 2015 to 4 percent in 2016 and the figure is projected to increase to 4.4 percent next year.