Kumho Tire to invest additional W100b in Hampyeong factory, targeting premium market

Kumho Tire will pour an additional 100 billion won ($66.2 million) into its new factory in Hampyeong-gun, South Jeolla Province, adding advanced production equipment to meet rising demand for large-diameter tires and premium original-equipment products.

According to the Financial Supervisory Service, Kumho Tire filed an amended disclosure Wednesday raising the planned investment in the Hampyeong factory from 660.9 billion won to 760.8 billion won — an increase of roughly 100 billion won, or about 15 percent above the original figure. The factory's completion date has been pushed back two months, from January 2028 to March 2028.

The expanded investment goes beyond simply boosting output; the focus is on upgrading product quality. Kumho Tire plans to build the Hampyeong facility into a premium tire manufacturing base equipped with AI-driven smart automation and eco-friendly production systems, strengthening its capacity to supply high-value-added products.

"We added advanced production equipment to proactively respond to growing demand for large-diameter and premium OE products and to strengthen our production competitiveness centered on high-value-added products," a Kumho Tire official said. The factory's production capacity remains unchanged from the original plan at 5.3 million tires per year.

The Hampyeong factory is Kumho Tire's next-generation production hub, being built at the Bitgreen National Industrial Complex in South Jeolla Province. Originally pursued as an alternative to the company's Gwangju factory, construction gained momentum after a fire at the Gwangju plant last year halted key production operations. After completing the first phase in 2028, Kumho Tire plans a second-phase expansion that would bring annual production capacity to 12 million tires.

Targeting the premium tire market through facility investment is a strategy to maintain a technological edge over fast-growing Chinese and Indian rivals. The company's product portfolio is already shifting toward higher-value items. The share of sales from tires 18 inches or larger rose to 45.1 percent last year, up 3.1 percentage points from the year before. The share of electric vehicle tires climbed from 16.3 percent to 20.6 percent over the same period.

Large-diameter tires rank among the most profitable product categories, alongside EV-specific tires and ultra-high-performance products. They command higher selling prices and margins, and demanding technical requirements — high-speed stability, braking performance and cornering capability — create relatively high barriers to entry.

Electric vehicles place particularly heavy demands on tires: rapid initial acceleration and heavier body weight put greater stress on the rubber. Large-diameter tires are therefore critical for securing handling, braking and cornering stability in EVs. Growing sales of large sport utility vehicles are also driving demand for larger-diameter tires.

Rising demand for premium OE products follows the same logic. OE tires are supplied to automakers for fitment on new vehicles, and carmakers' quality standards and performance requirements are more stringent than those for replacement tires — making production competitiveness in large-diameter and EV tires increasingly important.

Growing sales in North America and Europe are also cited as a driver of the new factory investment. Kumho Tire's combined sales share from those two regions expanded from 52.1 percent in 2022 to 61.3 percent last year. With higher-margin markets accounting for a larger slice of revenue, the need to secure production capacity for large-diameter and premium products has grown more pressing.

Kumho Tire is also building a new factory in Opole, Poland, its European production base. The Polish plant is targeted to begin operation in August 2028, with first-phase capacity of 6 million tires per year. Since last year's Gwangju factory fire, the company has been shifting production to its Gokseong and Vietnam plants and expanding outsourced manufacturing to limit disruptions, even as its domestic and overseas expansion projects simultaneously move into full swing.

Earnings have held up relatively well. According to financial data provider FnGuide, the market consensus for Kumho Tire's second-quarter consolidated results calls for sales of 1.28 trillion won and operating profit of 145.5 billion won. Compared with the same period a year earlier, sales are expected to rise about 5.0 percent while operating profit is seen falling roughly 16.9 percent. An improved product mix centered on large-diameter tires and stronger sales in North America and Europe should support revenue despite production disruptions, but rising raw material costs and tariff pressures remain key risks to profitability.

A potential sale of the Gwangju factory site adds further upside. The plant sits about 1.2 kilometers from a military airfield in Gwangju designated as the site for a Honam-region semiconductor cluster. If the airfield relocation and large-scale industrial complex development proceed in earnest, surrounding land values are expected to rise, and height restrictions long cited as an obstacle to relocating the factory could also be eased.

"The new Hampyeong and Poland factories are key projects to make up for the production shortfall following the Gwangju factory fire," said Lee Sang-hyeon, an analyst at BNK Investment Securities. "They will also have a positive effect on Kumho Tire's product mix as the company raises the share of large-diameter tires and EV OE products."