Nexen Tire's weak product mix widens profit gap with Hankook, Kumho

Nexen Tire's narrower range of products is increasing the gap in profitability between the South Korean tire manufacturer and its rivals Hankook Tire and Kumho Tire, according to recent data and industry experts, according to a report on Monday. In the first quarter of the fiscal year, Nexen Tire was the sole major tire producer among the three Korean companies to experience a decrease in operating profit compared to the previous year.

In contrast, Hankook Tire reported an 58% surge in its operating profit, while Kumho Tire saw a 24% boost. Experts attribute the widening disparity to differences in the product mix of the companies, which is driven by evolving trends in the global automotive industry. The growing popularity of sport utility vehicles (SUVs) and larger vehicles, coupled with the increasing preference for premium models and electric vehicles (EVs) with larger wheels, has led automakers to demand higher-performing tires.

EVs, in particular, typically necessitate tires that can accommodate increased vehicle weight and torque, presenting opportunities for manufacturers to sell more technologically advanced and valuable products. The term "high-inch tires" typically refers to larger wheel sizes, which have become more prevalent in recent years as a result of these industry shifts.