The Hungarian Tire Association (HTA) was established in 2011 with the participation of seven international tire companies with manufacturing capacity and representation in Hungary. In the first part of our series, you can read an interview with the Association’s President at https://hta.org.hu/megkerulhetetlen-tenyezove-kivanunk-valni/
This time, Mr. Min Sung Won, Managing Director of Hankook Tire Budapest Kft. answered our questions. According to him, today’s tires are much more efficient, economical and safer than their predecessors and, if all goes according to plan, 80% of their raw materials will come from sustainable sources by 2030. We also discussed the role of the Rácalmás plant, the challenges of SUVs’ and four-season tires.
Tire manufacturers are coming out with new types of tires every year, and the experts say that tires are getting better. Where the industry is today compared to, let’s say, ten years ago?
Manufacturers are constantly following market trends and user needs. Approximately 10 years ago, the labelling system was introduced, allowing consumers to easily compare the parameters of manufacturers’ products, making it easier to choose the right product. These labels include data such as fuel efficiency, wet grip and noise emissions. Customer needs have indicated their preferences for certain types of products and their main choice criteria. This was also a great help for manufacturers: it helped us to position ourselves in the market and to see where we still need to improve compared to our competitors. With ever tightening emission regulations and social responsibility now a major concern in all areas of the industry, it is of paramount importance that tires have a lower impact on fuel consumption (lower rolling resistance), while providing excellent grip and maximum safety. This required the introduction of a number of new and renewable materials. Their uptake has been steadily increasing in recent years as environmental concerns have become more important. Generally speaking, thanks to the development of the chemical industry, high-tech materials are becoming more and more widely available, even for the tire industry, and are constantly being used in the new generation of our products, thus increasing the technological value of our products.
Which means that today’s tires are superior to previous generations in every respect?
In deed. These tires are much more efficient, economical and safer than their predecessors. Some segments of the product range are becoming more and more specific. The emergence of a large number of SUVs, electric cars and, in particular, electric SUVs has also created new challenges for the tire industry. The weight of these vehicles is significantly higher than most passenger cars, but the tire has to perform its function perfectly despite the increased load. For example, the total weight of electric cars is approximately 20% more than those with internal combustion engines. To cope with this load, a much stronger tire structure had to be designed to ensure that the tire does not deform under heavy loads and minimises uneven wear, while providing reliable driving stability and optimum traction for the vehicle.
Let’s come back to energy labels! How much does this affect consumers’ choice?
It clearly influences customers. The greater the emphasis on environmental awareness, the greater the preference for tires with lower rolling resistance and more economical ratings.
What are the main orientations for R&D?
R&D focuses on two main areas: sustainability and environmental protection, as mentioned above, and innovation. It is very important that we keep pace with the increased demand for electric vehicles and develop premium quality tires that meet the segment’s expectations and customers’ needs, not only to serve the users but also to meet global environmental objectives. A long-term objective is also to achieve CO2 neutrality and to produce tires that are as clean as possible, with as few emissions and waste as possible. Our engineers are working globally – and here at our Hungarian factory – to further increase the proportion of recycled and renewable raw materials used in production, and we aim to have 80% of our raw materials from sustainable sources by 2030. Given that one of the key drivers of our company is innovation, a second focus is the development and application of artificial intelligence. Our R&D experts are also working to extend the potential of AI to as many manufacturing processes as possible. The aim is to build smart factories that can lead digital innovation in the tire industry, producing high-quality products tailored to customer needs.
How do you see how European and Hungarian tire use habits have changed in recent years?
In the case of Germany and countries to the east of it, we are talking about a seasonal, winter-summer market. This has worked for the last 25 years, but for a few years now this stable situation has been breaking up as the market for four-season tires has become more and more dominant. In 2021, the market share of four-season tires in Hungary was 8.5% and in 2022 YTD this share is already 10.3%. It is also important to underline the rise of tires developed for electric vehicles. As electric car sales increase, tire manufacturers will have to keep pace with the development and production of EV tires. I would like to highlight that Hankook’s high quality EV range now includes EV tyres under a separate product family called “iON”. These are specifically designed for electric cars.
What do you think about four-season tires?
Due to changing climatic conditions, the demand for four-season products is growing. Hankook offers an almost complete range of types and sizes in this segment. I am pleased to say that several of our four-season tires have been test winners in independent tests conducted by prestigious European car magazines. In Hungarian families, it is common to have two cars in the family, so for a car that is used almost exclusively in the city; a four-season tire is certainly one of the best options. On the other hand, those who drive a lot, up to 35-50 thousand kilometres a year, should consider seasonal replacement, as tires designed for extreme road conditions offer the greatest safety.
What are your views on a possible mandatory use of snow tires?
We would fully support this initiative, as winter tires would improve road safety and prevent many accidents and incidents. It is also important to note that when taking out any new insurance policy, it is a requirement that the car be fitted with tires suitable for the season.
It seems that the impact of the Covid virus has now been significantly reduced, but has transformed the market. How have you reacted to this?
The advent of covid-19 presented a series of obstacles for all players in the industry, but we have been able to adapt quickly to the changed circumstances. We have already closed 2021 with a profit and this trend seems to be continued in 2022. Demand for tires remained strong during the pandemic, with the replacement tire market showing significant growth. Last year, however, we faced serious logistical problems. A significant proportion of our raw materials come from outside the European Union, and the lack of empty containers at our suppliers in Gaza made transport difficult. We have successfully managed the continuity of supply of raw materials at the Hungarian factory, and at the global level the company has an agreement with Hapag Lloyd, the world’s fifth largest ocean carrier, to provide Hankook with containers on a continuous basis. Our large-scale warehouse investment in Rácalmás will be completed this autumn, which will enable the storage of large quantities of raw materials and total 1.5 million finished tires at the site, thus making production and logistics processes smoother.
What is the situation of the Hungarian production plant within the group is it expected that new tasks will be added or taken over?
Hungarian plant in Rácalmás is the only production unit of Hankook Tire in Europe and one of the most modern tire plants in the world. We employ 2,800 of the 20,000 Hankook employees worldwide. Thanks to the modernity of the factory and the expertise of our employees, we are operating at maximum capacity at all times, and we closed 2021 with a result of over 100 percent. We produce tires for cars, SUVs and light trucks in around 900 models and sizes to serve the European market. Adapting to the high demands of premium car manufacturers, our factory supplies products to brands such as Audi, BMW, Mercedes-Benz, Porsche and Volkswagen.