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| Outgoing Kumho Tire Chairman Kim Jong-ho |
Kumho Tire appears to be embarking on a new path to regain its lost market share and reputation as a reliable premium tiremaker under its Chinese owner, Doublestar Tire, according to company officials and industry analysts Friday.
Korea's second-largest tiremaker has signaled it will be more aggressive in sales and marketing, and invest more to bolster its research and development capabilities by replacing Chairman Kim Jong-ho, who has primarily focused on getting the company back on track since July when Doublestar bought a controlling 45 percent stake in the firm for 646.3 billion won ($580 million).
Kumho Tire is expected to name a new chairman soon who will likely take on Hankook Tire and other larger rivals at home and abroad, and spend more to develop next-generation tires for electric and other future vehicles, the analysts said.
The company said Friday that Kumho Tire Chairman Kim Jong-ho expressed his intention to resign, during a board meeting held a day earlier in Seoul.
"Kim came to the company when it was in crisis, and he has stabilized the firm, although he has yet to be satisfied with the performance," a Kumho Tire official said. "He is optimistic about the company's future, but I think he decided to entrust his control to other executives for more aggressive management."
The official added his company has yet to make any specific decision on the new chief executive, although Kumho Tire is reportedly seeking a new CEO from outside the company.
According to the tiremaker, Vice President Jeon Dae-jin will serve as acting CEO.
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| Kumho Tire's factory in Gwangju / Courtesy of Kumho Tire |
The outgoing chairman was hired as the Kumho Tire CEO in October 2017, when creditors began trying to sell the company.
As he had served as the Kumho Tire CEO from April 2009 to January 2012, the Korea Development Bank-led creditors acknowledged Kim for his understanding of the company and his experience of cooperation with creditors when Kumho Tire was under a creditor-led workout program from 2009 to 2014.
After his return to the company, Kim said he had tried his best to enhance Kumho Tire's sales capacity with investment in equipment and quality improvement.
In addition, he focused on forming close ties with Doublestar for the normalization of Kumho Tire's subsidiaries in China, which have been regarded as the main cause of worsening business performances.
However, Kumho Tire has suffered losses for seven consecutive quarters. It posted 38 billion won ($33.9 million) in operating losses in the third quarter.
The company has failed to boost profitability of its Chinese subsidiaries, as Doublestar has been passive about supporting Kumho Tire in China.
In Korea, it has frequently shut down its factories due to the lack of orders.
Against this backdrop, the Kumho Tire union held a rally in Seoul Nov. 29 to demand the normalization of the company's factories here.
"After having got under the control of creditors, Kumho Tire has suffered damages to its sales networks and brand equity," Korea Investment & Securities analyst Kim Jin-woo said. "It should put the top priority on recovery of its operational value for significant improvement in its performance. It is expected to stabilize the company's organizational structure in 2019 at the earliest."
Kumho Tire said its performances will improve from the fourth quarter.
It also hired one new executive director and promoted eight executives. The newly hired executive had worked for Kumho Tire before.
The company has yet to assign tasks to the new and promoted executives, so some analysts regard the recent reshuffle as Doublestar's test on Kumho Tire.
