Tire Companies Also 'Relieved' by Increase in Completed Vehicle Sales

Tire Big 3 All Show Q3 Sales Increase Year-on-Year
Expecting Future Growth in Vehicle Sales... "Continued Performance Improvement Anticipated"

[Asia Economy Reporter Yoo Hyun-seok] Domestic tire companies have succeeded in improving their third-quarter performance. The main reason is the increase in finished car production due to the easing of semiconductor supply issues. It is expected that the performance improvement trend will continue next year with the increase in finished car production and the easing of logistics and raw material burdens.

According to the industry on the 20th, the third-quarter sales of domestic tire companies Hankook Tire & Technology (Hankook Tire), Kumho Tire, and Nexen Tire all improved compared to the previous year. Hankook Tire's third-quarter sales increased by 25.7% year-on-year to 2.2997 trillion won. Kumho Tire, which has been troubled by the issue of ordinary wages, also recorded sales of 977.6 billion won, up 50.71%, and Nexen Tire increased by 32.59% to 709.2 billion won.

The biggest factor in the performance improvement is the improvement in finished car production. Global finished car sales in the third quarter of this year were 19.534 million units, an increase of 10.8% compared to the same period last year. Finished car production had been sluggish due to production delays caused by concerns over semiconductor supply. In the first quarter, production was 18.591 million units, down 6.2% year-on-year, and in the second quarter, it was 17.525 million units, down 12.4%. However, sales improved in the third quarter for the first time in a while.

Product prices also rose. The average price of Hankook Tire's major products last year was 79,876 won, but it rose to 85,119 won in the third quarter of this year. Kumho Tire's price increased from 62,030 won to 73,603 won, and Nexen Tire's price also rose from 52,464 won to 61,813 won.

Operating profit also improved. Hankook Tire recorded an operating profit of 192.4 billion won, an increase of 6.4% compared to the same period last year. During the same period, Kumho Tire turned to a profit, recording 2.3 billion won. Nexen Tire's operating profit decreased by 14.48% to 1.1 billion won, but it returned to profit in the third quarter after losses in the first and second quarters.

The outlook is also positive. The rise in raw material prices, which affected the first half of this year, is stabilizing. In addition, the previously high logistics costs are also on a downward trend. As of the 11th, the Shanghai Containerized Freight Index (SCFI), a global maritime freight indicator, recorded 1443.29 points. This is a 71.8% decrease compared to 5109.6 points recorded in January this year.

Finished car sales are also expected to increase further next year. Although there are concerns about demand decline due to economic slowdown, sales are expected to increase compared to this year as pent-up demand continues. Eugene Investment & Securities also forecast that global production expansion next year will increase new car demand by 8.4% year-on-year to 82.3 million units.

Jang Moon-soo, a researcher at Hyundai Motor Securities, explained, "With the easing of semiconductor supply disruptions, demand recovery led by new car tires (OE) is additionally progressing, and the overall volume increase trend is continuing," adding, "The burden of cost increases in the third quarter is easing, and the price hikes are being fully reflected, so margins will clearly improve after the fourth quarter."

This content was produced with the assistance of AI translation services.