Hankook aims higher with Top 5 global sales goal

NASHVILLE, Tenn.—Every week, it seems like Hankook Tire & Technology Co. Ltd. announces another piece of news, be it a product release, sponsorship, expansion or another original equipment fitment.

Taken individually, they are what a tire manufacturer routinely does: share news about the company that keeps its product and brand name current as it seeks to increase market share. Collectively, everything the Seoul, South Korea-based tire maker has done is designed to meet one clear objective: Become a Top 5 global tire maker by 2030.

Hankook states that goal on page 16 of its 2022-23 Sustainable Mobility ESG Report, which was released Aug. 18.

At the heart of that Top 5 in global sales goal are other key objectives: Net sales of $13 billion; annual production capacity of 150 million units; and No. 1 in EV profitability.

Today, Hankook sits at No. 7, according to Rubber News' 2023 Global Tire Report. The company had global sales of $6.3 billion in 2022, just behind No. 5 Sumitomo (sales of $7.2 billion) and No. 6 Pirelli & C. S.p.A. ($6.96 billion).

Hankook's goal of $13 billion in sales by 2030 exceeds last year's total global tire sales for No. 4 Continental A.G. ($12.4 billion).

"Obviously to do that, we have to focus on the major markets, like North America and Europe," Rob Williams, Hankook Tire America Corp. president, told Tire Business in an exclusive interview.

North America (U.S. and Canada) accounts for roughly 30 percent of Hankook's global sales.

"The main thing we have to do is to continue to strengthen the partnerships we have with our dealer network," said Williams, who was promoted to his position in January. "We have some phenomenal partners, both nationally and regionally. Wholesale, retail, car channel—we do well in each of those, and we continue to talk about some of those with products that do extremely well in each channel."

Hankook has chased that goal of breaking into the top five for several years: It was more than seven years ago when top executives told dealers at a Hankook Partners Day gathering in Costa Rica that the tire maker had plans to break into the top five in global sales by 2018, but several factors have hampered that pursuit, not the least of which was something called COVID-19.

It appears to be on pace now: After global sales grew nearly 11 percent in 2021, Hankook's sales grew another 17.5 percent in 2022, as operating income increased 9.9 percent to $546.9 million.

Sales in North America grew 27.3 percent, to $1.89 billion.

That momentum is continuing into this year; sales in the first half of 2023 increased 14 percent over 2022, to $3.37 billion.

Hankook has taken a three-legged stool approach to attacking that goal: Brand awareness; products; and expansion. And as with the proverbial stool legs, one aim can't stand without the other two.

Hankook has made a well-placed pitch as the "official tire" of MLB, and the move has garnered exposure. The contract for that agreement is up this year and it's unclear if Hankook will maintain the title.

But the signage agreement the tire maker has with MLB is likely to stay, keeping the Hankook logo just behind home plate at most MLB stadiums.

"That's the most important element," Williams said of Hankook's signage agreement.

In addition, Hankook will receive great exposure as sponsor of MLB wildcard games in early October.

Hankook also has its sipes heavily invested in several auto racing circuits, but one—the tire maker's sponsorship of the ABB FIA Formula E World Championship—could be the most significant.

Three years ago, Formula E's organizing body, the Federation International de l'Automobile, selected Hankook as the designated race tire supplier for Formula E, taking over from Michelin, which had filled that role since the series' first season in 2013.

The tires being used for the series, Hankook's iON evo products made specifically for electric vehicles, are built with nearly 30 percent sustainable materials.

More recently, the tire maker secured a deal with Italian sports car manufacturer Lamborghini Squadra Corse to be the designated tire supplier of the Lamborghini Super Trofeo, a single-make race series featuring the Lamborghini Huracan Super Trofeo Evo2.

The Super Trofeo is three racing series running concurrently—in Europe, North America and Asia—under the same set of rules and using identically prepared Huracan models before the separate series' top finishers compete at a Grand Finale in Italy. Even though the circuit is based in Europe, Williams said many Super Trofeo races are broadcast in the U.S.

Hankook certainly has staked the EV space with its iON evo portfolio—more on that later—and it's doubling down by "sponsoring and logo-ing a lot of EV stations in major cities here in the U.S.," Williams said.

"When somebody sees a charging station sponsored by Hankook Tire, and we put an illustration of the iON or the Dynapro line ... we want to focus on those types of activities."

Hankook's brand equity wouldn't improve without a good product, Williams said. And he touted the tire maker's products, particularly the aforementioned iON evo portfolio.

Last fall, Hankook unveiled the iON evo AS and iON evo AS SUV, Hankook's first foray into the EV tire aftermarket.

In late June, the company released the iON evo and iON evo SUV, products designed for high-performance EVs, with other summer and winter EV specific products to follow, with the iON moniker.

That bolsters a portfolio that also includes the premium Ventus lineup; the Dynapro line, for SUVs and light trucks; the Kinergy lineup that offers, among others, all-season and all-weather passenger/SUV tires; and the winter I*cept lineup.

Williams said the company will unveil some Kinergy updates in the first quarter of 2024, as well as update several products in its Laufen value brand family.

"We don't let anything get stale because the minute we see a need in the market to bring something new and innovative out, we do that," Williams said.

Hankook said it has an SKU available for 85 percent of the vehicle market in the U.S.

When combined with excellent brand awareness, great products go a long way. Especially in the original equipment space.

Today, the company provides fitments for 42 OEMs worldwide, including the most premium brands. OE sales account for roughly 20 percent of U.S. sales, Williams said, and more in Europe.

"Our OE growth has been nothing short of phenomenal, and we're so proud of that," Williams said. "The most important thing is auto manufacturers see the value of Hankook product on their vehicles, and it enhances that vehicle," Williams said. "And it helps us as well to create more demand and pull-through on the replacement side. Our car dealer channel is extremely robust."

He said Hankook will continue to work closely with OEMs, to gain share of account with them.

Especially as EVs emerge.

"Obviously as the vehicles go electrified, now that we have this product that we're extremely proud of, we're confident we can gain in that segment."

It's been a little more than a year since Hankook announced plans for a $1.6 billion expansion at its plant in Clarksville, Tenn.

The two-phase investment will double capacity for passenger and light truck tires to 11 million units a year and establish radial truck/bus tire manufacturing there, providing another million units a year.

It is projected to create between 800 to 1,000 new jobs once both phases are complete.

The expansion will bring the total investment in the plant to $2.2 billion since the parent company first approved the investment to build in Clarksville, a city of 150,000-plus residents in north-central Tennessee. The plant opened in October 2017.

Williams said plans remain on schedule to break ground on the expansion later this year. Production of Phase II and III is scheduled to begin by the fourth quarter of 2024 and reach full capacity by early 2026.

Williams said the tire maker plans to build a warehouse at the campus in order to provide more distribution for that part of the country.

The factory will produce premium products, with 18-inch rim diameters and up.

"The main thing is, we can now source local to local," Williams' said. "There's a big demand for U.S.-made product. We're very excited both on the consumer and medium truck side. A lot of fleets really want that local product, made in the U.S."

And with truck/bus being part of the local capacity, "we're confident that's going to help us grow brand awareness and market share and all the things we aspire going into 2030."

Once the U.S. plant expansion is complete, Hankook will continue to source product from six of those plants, Williams said, "because our sales in North America, including OE, replacement and in Canada, will still outpace the number of units we can produce in the Tennessee plant, even at full capacity later this decade."