Kumho Tire plans to build its first tire factory in Europe to meet the demands of major car makers such as BMW and Mercedes-Benz AG. The company will invest about $750.8 million (one trillion won) to complete the project by 2027. This will help solve some of the challenges, including the Red Sea shipping crisis.
According to the President and CEO, Jung Iltaik, Kumho Tire is considering Turkey, Serbia, Romania, and Portugal as potential locations. The decision will be based on a review of the local and federal tax incentives and subsidies. The company hopes to complete the selection process by the end of this year.
Kumho tires are mainly exported to Europe from Vietnam where the tire manufacturer sources its raw materials. The Houthi Militia in Yemen has been making transportation difficult by attacking vessels entering the Red Sea through the Suez Canal.
This has increased costs by 10% and extended delivery times by up to two weeks as many companies are forced to sail via Cape of Good Hope. Audi, Mercedes-Benz, and BMW have already requested Kumho Tire to set up a factory in Europe.
Kumho supplies original equipment tires to Peugeot and Volkswagen AG. It generated a quarter of its sales (936.9 billion won) from Europe in 2023, mainly from selling replacement tires.
The current goal is to increase the supply of original equipment tires to other automakers by building a plant that can produce up to 12 million tires per year. Tires such as those included in the Ennov lineup for high-end models will also be included.
Construction is set to begin next year while commercial production is set for 2027.