Kumho will build a plant in Europe

Kumho Tire intends to invest over 1 trillion won (approximately $700 million) in building its first factory in Europe by 2027. After examining subsidies, tax incentives, and other factors, four countries have been selected as potential locations for the production facility: Romania, Serbia, Portugal, and Turkey. The decision is expected to be made by the end of 2025.

According to Kumho's CEO, Jeon Il-taek, increased logistical costs due to the situation in the Red Sea and other factors led to the decision to build a factory in Europe. He stated that construction is planned to begin next year and be completed by 2027.

Currently, Kumho tires are supplied to European automakers such as Volkswagen and Peugeot from a factory in Vietnam and are transported by sea. The planned European production facility will have a capacity of 12 million tires, which is expected to help attract premium-segment clients, such as Mercedes.

Kumho was sold to Chinese Doublestar due to financial difficulties faced by the Kumho Asiana Group. In 2022, the company returned to operational profitability, which reached a record 411 billion won ($290 million) in 2024.

Last year, Kumho's turnover in the European market was 963.9 billion won ($680 million), accounting for 23.8% of the company's total turnover. Primarily, tires were sold in the secondary market, while the OE segment accounted for less than 25% of revenue. According to Korean media, since Kumho lacks its own production in Europe, it is more challenging for the company to attract local automakers as permanent clients, and the profitability of supplies from Vietnam is linked to the availability of natural rubber.

The situation changed last year due to the crisis in the Red Sea. As a result of the complications in supplies through the Suez Canal, tires had to be transported around the Cape of Good Hope, increasing logistical costs by 10% and delivery time by two weeks.

"Due to the recent increase in geopolitical instability, we have received requests from European automakers, including the big German three - Mercedes, BMW, and Audi - to build a factory," Jeon said.

The new factory plans to produce tires under the premium brand EnnoV, created specifically for the electric vehicle segment. After the launch of production, Kumho's total capacity will increase to 74 million tires per year. The investments will be made by both Kumho and Doublestar.

Previously, Hankook (with a capacity of 17 million tires per year) and Nexen (which recently increased its production from 5.5 to 10 million tires) have already opened factories in Europe.

Photo: mk.co.kr