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 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—good to have modern, innovative products to sell but also bad in that the new product lines overlapped to a degree with the lines being replaced, creating some inventory and sell-out issues.
The company has, for the most part, worked through these inventory issues, he said, and thus dealers will see fewer and fewer monthly overstock inventory clearance pricing.
At the heart of Kumho's Take Control strategy is the opening in 2016 of the company's first U.S. tire plant, in Macon, Ga., and the subsequent move of the firm's headquarters to Atlanta. This plant's primary objective is to serve the company's original equipment customers in North America—Kia, Hyundai and Fiat-Chrysler primarily—Mayfield said, but it also is filling some key replacement market products as well along with the firm's plants in South Korea and Vietnam.
While dealers shouldn't expect any major changes to the consumer product portfolio or core programs, Kumho will seek to improve relations with dealers by simplifying the training platforms and streamlining reporting procedures in an attempt to get dealer credits and refunds processed quicker. The goal is a two-week turnaround, he said.
Another key aspect of having a U.S. plant, Mayfield said, will be to grow the firm's sales to accommodate the 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 picked up in the fourth quarter, he said, with November sales alone being the highest month of the year.
As for growing sales in North America, Mayfield said Kumho feels it's strong already on the wholesale side but needs to shore up its retail presence. In that vein, Kumho is in talks with a number of national and regional retailers about adding the brand to their mix.
While the company has no new consumer product launches scheduled for 2017, it is working on new products in the all-season high-performance and the all-terrain and mud-terrain light truck fields for 2018-19, as well as a replacement for the Crugen KL33.
This latter development is crucial, according to Steve Ewing, market intelligence and pricing manager, because it is a product for the growing CUV/small SUV segment, which accounts for roughly a third of U.S. vehicle registrations.
Kumho also is stepping up development on the commercial side, essentially rebooting a side of the business that had gone nearly dormant.
Kumho recently hired Gary Sass—an industry veteran with more than 20 years' experience with Continental Tire the Americas and Goodyear—to be its director of commercial sales along with regional sales reps for the East and West Coasts.
Looking ahead, Kumho is developing new long-haul steer tires and a complete portfolio of regional commercial tires to roll out in late 2017 or early 2018.
From a promotion standpoint, Kumho is expanding its relationship with the National Basketball Association and seeking to leverage that status with several new initiatives during the 2016-17 season, according to Brian Gallagher, senior marketing manager.
Kumho acknowledges its status as a "challenger" brand, he said, and needs to find creative ways to reach customers.
On the matter of Kumho's ownership status, a banking consortium that controls 42 percent of the company's stock is looking to sell that share, Mayfield said. What is known is the consortium wants to complete the sale by late January 2017, that there are at least five serious bidders in the discussion, and Park Sam-koo—Kumho Industrial Co. chairman—has a right of refusal to match the bid the consortium deems the best.