South Korean tire companies are accelerating their efforts to penetrate the Middle Eastern market. Unlike mature markets such as North America and Europe, where growth is slowing, the Middle East is expected to see a steep increase in the demand for new car tires.
According to electronic disclosures on Apr. 11, Kumho Tire and Nexen Tire established sales subsidiaries in Egypt last year, transitioning from their previous status as branch offices. A spokesperson for Kumho Tire said, “Considering the growth trend of the Middle Eastern tire market, we have upgraded our Cairo office in Egypt to a subsidiary.” Similarly, a Nexen Tire official said, “To enhance our sales activities, expand our buyer base, and bolster our local staff, we have established a local subsidiary in Cairo. Egypt will serve as a hub as we also aim to tap into the North African market.”
Typically, tire companies begin their international expansion by setting up branch offices, which they convert to subsidiaries as they recognize the importance of the market. For instance, Kumho Tire operates sales subsidiaries in ten countries, including the United States, Canada, Mexico, Germany, the United Kingdom, France, Australia, Japan, China, and Egypt. It maintains branch offices and offices in 13 other countries, such as Brazil, Thailand, Poland, and Turkey.
The Middle Eastern market is experiencing rapid growth. Automobile sales in the region increased from 1.73 million units in 2020 to 2.29 million units in 2022, driven by economic growth, population increases, and the legalization of women drivers. Hyundai Motor and Kia project that the Middle Eastern automobile market could expand to 3 million units by 2030. As the automobile market grows, so does the demand for original equipment (OE) and replacement equipment (RE) tires for new cars.
The Korean tire industry is emphasizing its superior quality over Chinese products. An industry insider explained, “In Europe, the sale of luxury sedans significantly impacts tire purchases due to the emphasis on ride comfort. In contrast, the Middle East, while diverse, generally prioritizes cost, leading to fierce competition with more affordable Chinese tires. Due to the region’s climate, where summers are long, tires are often seen as consumable parts that need frequent replacement, leading to a preference for cheaper options.”
Kumho Tire plans to export its technology to the Middle East to demonstrate its competitiveness and lay the groundwork for increased regional production and sales. Last month, Kumho Tire signed a technology export agreement with Saudi Arabian tire manufacturer Blatco. Kumho Tire will provide technology for the next 20 years to be used in Blatco’s new tire factory, which spans 280,000 square meters.
Hankook Tire & Technology was among the first to establish sales subsidiaries in the Middle East, with offices set up in Dubai, United Arab Emirates, in 2019 and in Cairo, Egypt, in 2022. Last year, the company launched ‘iON,’ a tire range exclusively for electric vehicles, in Saudi Arabia during the second half.
