Modern Tire Dealer

JAN 2019

Magazine for the professional tire industry

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70 F o c u s O n I n d u s t r y K umho Tire USA Inc. has new ownership, new plans for its product lineup, a new pricing strategy, plus a new stream- lined dealer program for 2019. But one thing remains the same — the tire maker says its focus "is on the independent tire dealer channel." Shawn Denlein, executive vice president of sales and marketing, said independent dealers remain the biggest force for replacement tire sales in the U.S., and Kumho is committed to growing through its dealer partners. "Our focus is on the independent tire dealer channel. at's where we have to stay focused. at's the core. Not only is it the biggest segment, but for Kumho it's the best way for us to get out and talk about our brand." Denlein himself is part of the "new" at Kumho; he joined the company in April 2018. An industry veteran with time at Yokohama Tire Corp., Hankook Tire America Corp., and most recently Monro Inc. He said Kumho sees an opportunity to grow by making adjust- ments that help its existing dealers. Among the changes underway is a consolidation of overlapping treads in the company's tire lineup. PRODUCT CONSOLIDATION e company already has launched two products — the Crugen HP71 and Ecsta PA 51 — with this goal in mind. e Crugen HP 71 is a tire for CUVs and SUVs. It replaces the Crugen ML33 and Ecsta STX. e Ecsta PA51 is an all-season ultra- high performance tire, replacing the Ecsta 4X11 and Ecsta PA31. Here's what's coming next: • In the grand touring tires segment, the Solus TA51 will replace the Solus TA71 and Solus TA31. • In the performance category, the Ecsta PS72 will replace the Ecsta PS91 and Ecsta PS31. • For the off-road segment, the Road Venture MT71 will replace the Road Venture MT51 and Road Venture KL71. Denlein said the consolidation won't happen all at once, but there will be a steady cleanup through 2021. "We're getting rid of five to six product lines and condensing moving forward. Part of this investment that we received from Doublestar allows us to accelerate a lot of the plans that we have." THE DOUBLESTAR EFFECT For two years there were questions about the ownership of Kumho, but that was finally settled in July when Qingdao Doublestar Tire Industrial Co. acquired a 45% stake in the Korean tire company. Denlein said he's oen asked what the acquisition means for Kumho. e tire maker has maintained its independent management. "Kumho still operates Kumho. Doublestar operates Doublestar. In the foreseeable future that's the way it will be." Doublestar invested 3.9 billion RMB (between $500 and $600 million) in Kumho and is now the largest stakeholder. "With Doublestar's financial investment it's very positive for Kumho because Kumho can reinvest that money into things that are important to everybody in this room — product, plant and technology — three areas that can move the company forward." e deal also is expected to help both companies increase business in China. "e focal point right now is the Chinese market. e synergy in China is the first thing being explored." Both companies will benefit, Denlein said. Doublestar gains access to Kumho's technology, and Kumho benefits from the financial investment by the Chinese tire company. IMPROVING MARKETABILITY Consolidating the product line is an important element of the company's bigger focus on marketability. But it's part of a three- prong approach. 1. Price: In the third quarter of 2018 the company moved away from a pricing strategy that was heavily focused on deals and bonuses. Denlein said the old model was a transactional-based business. "We were doing deals, and being very aggressive in pricing. at works short term, but long term the issue is you don't have a lot of stability in the market. You have peaks and valleys, and then programs get out of line and your margins will start to suffer." 2. Dealer margins: "We've simplified our dealer program." Denlein said it was too complex with too many pieces. e system has been streamlined from 10 components to three or four. "at helps us, and helps you because it's easier to track." 3. Growing with OE: Kumho has spent 20 years increasing its share of the original equipment market. In the U.S. the first fitment was in 1997 with Mercedes, followed by Hyundai and KIA in 2003 and 2004, respectively. Since then, the company has completed OE orders on 61 vehicles, the latest of which was Kumho's first fitment with Volkswagen Group of America for the 2018 Atlas SUV. Denlein said Kumho wants to expand existing OE relationships, and focus particularly on Japanese vehicles. ■ Kumho focuses on independent dealers 3-PART PLAN INCLUDES MORE STABLE PRICING "We want to be more connect- ed to the dealer," said Kumho's Shawn Denlein. Harry Choi, left, welcomed NBA champion Kevin Willis to Kumho's 2018 dealer meeting, where Willis was the featured speaker. At the end of the meeting Choi announced his plans to return to Korea. M T D J a n u a r y 2 0 1 9 Joy Kopcha By

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