Bringing Korean Ultra-High Performance Tire to MexicoMon, 09/01/2014 - 16:08
The value of the Mexican tire market is expected to hit US$8 billion by 2018. The catalysts of this growth are the rise of vehicle manufacturing and ownership in the country. Attractive investment conditions have sparked fierce competition among the biggest tire companies, and while Continental, Bridgestone, Cooper Tire, and JK Tornel battle for the biggest share, other tire companies like Hankook have begun to carve a niche of their own. “Hankook has had a presence in the Mexican market since the 1990s by importing products straight from Korea,” explains Inho Choi, Director General of Hankook Tires de México. “We consolidated our presence in 2011 by becoming a Mexican company. By so doing, we are now able to give direct service to our distributors and facilitate the purchasing of products,” he adds. With this consolidated presence having led to a market share of 3.3%, the company has set its sights on increasing its participation to 8% in five years. “Hankook is currently in seventh position but our objective is to soon be among the five main tire brands in Mexico,” Choi states. In order to fulfill its ambition, the company has drawn up a careful strategy involving several stages, from improving its product portfolio to expanding distribution network.
Prior to rolling out this strategy, the company has identified which sectors of the industry it is to focus on. “In Mexico, we do not have strong relations with the OEMs so we will focus on the aftermarket,” Choi explains. “In addition, Mexico has one of the world’s largest bus and truck fleets, which will drive demand for tires.” The company is now proceeding to adapt its product offering to these segments. Its products are commercialized in three main sectors: cars, vans, and light and heavy trucks. Within this varied product portfolio, Hankook’s focus is on ultra-high performance tires, ranging from 35-50 inches and 16-24 inch rims. The company also has tires for vans, ranging from urban to all-terrain, while offering specially designed tires for heavy-duty fleets and owner-operators. “Tires are the second most important expense for a fleet so we take advantage of this by offering cost-effective and fuel efficient tires to fleet owners,” states Choi.
Choi stresses the importance of strengthening interaction with customers by having a capable technical assistance department and regular follow-ups on the performance of Hankook tires. “This means that if the tires are suffering from irregular wear and tear, we can identify the cause and report on these to fleet owners and maintenance managers.” Choi mantains that in most cases, people believe the tire is at fault while a tire malfunction is often due to external factors. “Based on our aftermarket service, we can guarantee a long lifespan for our products,” he adds. “One out of ten vehicles worldwide carries our brand and we want to become the first choice for clients when a tire replacement has to be made.” This ambition has spurred the creation and expansion of the company’s distribution network around the world. “Expanding our presence through this network gives us more access to the end user and leads to a more established presence within the Mexican market.” However, Hankook stands out from its competitors in that it does not have production capabilities in Mexico. To make up for this, it pours its resources into distribution. “A new plant will be constructed in the US and will begin operations in 2016. It will be in charge of supplying 80% of the North American market.” While Choi admits that Hankook has no shortterm manufacturing plans for Mexico, a distribution center was inaugurated in Queretaro in July 2013 to serve as the main distribution point for Mexico. Prior to this center, the company’s logistics strategy was to supply directly from South Korea and China to the distributors. “Hankook offers its distributors a product that attracts a niche market and strengthens their product portfolio in different regions of Mexico,” Choi explains. “Although we do not have exclusive distributors, there are shops that are 100% identified with our brand.”
A company can easily identify the status of its distribution network but it is far harder to understand the decision making process of an end-user. In response, the company has developed aggressive marketing campaigns to ensure that it remains at the forefront of customers’ minds. “In order to increase our client base and presence in the aftermarket, we need to reinforce our sales team and sales points in order to be closer to end users.” The company has increased its presence through different marketing mediums, including TV, magazines, and radio in order to raise its profile.