OE push: Hankook supplies Mercedes-Benz, BMW, Toyota and Nissan

Hankook Tire Co. Ltd. has been very aggressive in securing original equipment fitments in recent years, and held a major press conference Sept. 2, 2013, in Seoul, South Korea, to announce its latest fitments.

The company said it has been chosen by Daimler AG as an OE supplier for the new 2014 Mercedes-Benz S-Class. The new luxury sedan will initially be fitted with Hankook Ventus Prime²tires in size 245/55R17 102 W. The tires are not run-flat tires, and the company did not know if any of these cars would be available for sale in the United States market.

"The Mercedes-Benz S-Class is recognized as one of the finest luxury cars in the world," said Seung Hwa Suh, Hankook's vice chairman and CEO. "We are delighted that the Hankook Tire Ventus Prime² we have developed a tire for Daimler AG meets all aspects of our customer’s exacting requirements for their new Mercedes-Benz S-Class."

The tires for the Mercedes-Benz S-Class are currently being produced at Hankook's main factory for ultra-high performance tires in Geumsan, South Korea. The fitment began in June, according to Hankook.

In addition to the Mercedes-Benz S-Class announcement, the company said its UHP Ventus S1 evo2 in size 225/50R17W has also been selected for the company’s E-Class. The supply agreement begins this month.

The company also announced that it has been chosen as a supplier to BMW’s new 5-series with the Ventus S1 evo2 in size 225/55R17W. This will be the fourth BMW model that Hankook supplies with tires. The tires will be on the 520i, 528i, 530i, 535i and 520d. As with the Mercedes fitments, the company did not know if any of these cars would be available for sale in the U.S. The tires are not run-flat tires.

Suh said the company “wants to provide high quality tires but also enhance our reputation with consumers” with the addition of the upscale German car maker fitments.

Hyun Bum Cho, president and CMO of Hankook Tire Co., put it this way: “We have achieved our own grand slam by now supplying all three German automakers (Audi, BMW and Mercedes).”

Cho said the recent announcements now place Hankook among the top tier tire companies in the world.

The company also said its Optimo H426 was selected by Toyota for its 2014 Corolla in size 195/65R15S; the same tire was selected for the Nissan 2014 Altima in size P215/60R16T.  Both of these cars are being sold in North America.

Hankook has been active in the OE business during 2013. Earlier this year, the company landed a contract for the Honda Civic with its Optimo H426 tire in size P205/55R16H.,

Hankook started its OE push in 1999. Despite the relatively short history compared to other competitors, OE sales have been continuously growing throughout the years, says Hankook.

Hankook has now established business partnerships with all of the global top-eight automakers.

Since 2009, Hankook has gradually built partnerships with various global automakers, including premium automakers BMW, Audi, Lincoln, Daimler Trucks North America (DTNA) and Chrysler.

In recent years, the company has expanded its OE fitment portfolio into German premium car makers Mercedes-Benz, BMW and Japanese automakers Toyota, Nissan and Honda.

Hankook has seen a sharp increase in OE sales since 2009, with OE sales reaching 37% of total (unit) sales in 2012. These OE shipments totaled $1.8 billion, which amounted to about 28% of the company’s total annual revenue. Also, compared to the year before, OE supply contracts to global premium automakers jumped by 27.6%, led by factory-installation of UHP tires.

Hankook believes its OE business highlights its technology and quality. The company says, “Premium OE supply expansion is a part of our core mid- to long-term strategic objectives. Having said that, we will continue our endeavor to further raise Hankook Tire’s brand equity as a top-tier company through extending our premium OE portfolio, and we will continually boost market share worldwide by raising product quality.”

About 58% of the OE tires manufactured from the company’s Geumsan plant are supplied to domestic automakers in Korea, while the rest (approximately 42%) are headed to overseas markets such as North America, Europe, Mexico and Japan.

In 2012, Hankook produced about 30% of total global OE tires at the Geumsan plant, which is equivalent to roughly 11% of total tires produced by the Hankook's global production network. In addition, the OE tires manufactured at the Geumsan plant make up about 42% of its aggregate annual production capacity. -- Greg Smith