GRAND CAYMAN—After several years of uncertainty and inconsistency, Kumho Tire USA Inc.'s message to its dealers moving into 2017 is one of consistency, stability and dependability.
The company's message of stability may be unprecedented in recent industry history—no new products in 2017 and no changes to the firm's core customer relations programs.
Those were some of the highlights of Kumho's "Take Control" message, as presented by Jim Mayfield, executive vice president of marketing and sales, to the representatives of roughly 30 of the company's largest customers in the U.S. and Canada attending its 2016 North American dealer meeting at the Ritz Carlton on Grand Cayman.
Mayfield prefaced his remarks, however, by noting that Kumho had rolled out 11 car and light truck product lines in the past 24 months, giving Kumho one of the most modern product portfolios in the industry.
This situation has both positives and negatives, he said, noting that it's good to have modern, innovative products to sell. Having the new product lines overlap with the lines being replaced is challenging, though, as it creating some inventory and sell-out issues.
The company has, for the most part, worked through these inventory issues, Mayfield said.
At the heart of Kumho's Take Control strategy is the company's U.S. presence. Kumho opened its first U.S. tire plant in Macon, Ga. and subsequently moved its headquarters to Atlanta. This plant's primary objective, Mayfield said, is to serve the company's OE customers in North America—Kia, Hyundai and Fiat-Chrysler primarily. Kumho also hopes to fill some key replacement market products along with its plants in South Korea and Vietnam.
Mayfield said another key aspect of having a U.S. plant will be to grow the firm's sales to accommodate added capacity. The company has its work cut out for it in this respect: sales in North America through the first nine months of 2016 were down roughly 8 percent, due to overall weak market demand and "intensified" price competition, according to the parent company's second and third quarter earnings reports.
Mayfield acknowledged the sales reports, but said the lower sales revenue reflects price adjustments Kumho made earlier in the year to bring the company's pricing more in line with prevailing market prices. Unit volume, he noted, was down but not nearly as much as revenue.
Sales have picked up in the fourth quarter, Mayfield said, with November sales alone being the highest month of the year.