Kumho Hopes to Build Brand Value with Doublestar Deal

08 April 2018 | Source from Tire Review

Doublestar purchase Kumho Tire

On Sunday, April 1, Kumho Tire management and its union agreed to the creditor’s plans to sell Korea’s second-largest tire maker to China’s Qingdao based company Doublestar which vows to invest a substantial amount of capital in the company to get it back on track and profitable.

According to a release from Kumho, Doublestar has guaranteed to allow the Kumho Tire management team based in Seoul, Korea to run the business independently and continue to market the brand name which is similar to the acquisition of Volvo by China’s Geely. In 2010, the Chinese automaker bought Volvo and focused on investing capital into the Swedish car manufacturer, while allowing for independent management in order to further build the Volvo brand.

Through the agreement with the creditors Doublestar plans to purchase a majority ownership stake in Kumho Tire through a rights issuing in the next three months. This investment from Doublestar is expected to mitigate and improve Kumho’s current financial condition. Additional monies will be injected by Kumho creditors to cover urgent expenditures to resolve the current debt and liquidity crisis.

Planned capital investments will be leveraged to stabilize the company and upgrade and expand manufacturing and R&D facilities, augment innovative technology and increase OE supply opportunities across the globe.

In particular, the company will focus on upgrading its production lines for eco-friendly tires in a bid to sharpen its edge in the highly competitive, technology-intensive market segment. It also plans to make its tires more affordable by normalizing production in China and enhance the quality of its products by improving its production lines in Korea and the rest of the world – a move that it believes will help build its brand value further.

With these planned capital investments and global support, Kumho Tire will continue to develop, manufacture, sell and market its products under the same brand in global markets with a continued focus on enhancing customer relationships and consumer demand.

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