South Korean tire manufacturers Hankook Tire, Kumho Tire, and Nexen Tire plan to raise prices in March. This decision follows a more than 30% surge in raw material costs last year, compounded by the recent depreciation of the Korean won. It marks their first price hike since 2023.
However, with all three companies posting record profits last year, they will likely face consumer scrutiny.
Industry sources revealed Thursday that Kumho Tire will increase prices for replacement tires (RE) supplied to its TirePro outlets starting March 1. The price hike is expected to range from 2% to 7% for passenger vehicle tires, including those for sedans and SUVs, and from 2% to 5% for commercial vehicle tires used in trucks and buses.
Individual distributors will set final retail prices, making the exact increase uncertain, but consumers can expect to see higher prices. Meanwhile, prices for original equipment (OE) tires—those supplied to automakers during vehicle production—will remain unchanged.
Hankook Tire & Technology is also planning an average 3% price increase for passenger and commercial replacement tires starting March 1. Nexen Tire is considering a similar move next month. Like Kumho, both companies will raise distributor prices while keeping OE tire prices stable.
Hankook and Kumho achieved double-digit operating margins last year, benefiting from an improved product mix despite rising production costs.
2024 was a banner year for the three tire makers, with each company achieving record-breaking sales. Industry leaders Hankook and Kumho also posted high operating profits. Hankook’s operating margin soared to 18.7%, while Kumho’s reached 13.0%, increasing by 3.8 and 2.8 percentage points from the previous year. Nexen Tire, however, saw its operating margin decline by 0.92 percentage points to 6.0%.
Despite their strong financial performance, all three companies are raising prices due to last year’s sharp increase in raw material costs. Natural rubber, synthetic rubber, and carbon black together account for about 40% of their total sales.
An industry insider explained, “Profitability has improved thanks to a higher proportion of high-margin, large-diameter tires. However, the continuous rise in rubber prices has significantly increased production costs.”
Natural rubber prices in the international futures market surged from 152.90 cents per kilogram in January 2023 to 211.50 cents in September, reaching a seven-year high. After a brief dip, prices rebounded in November and currently stand at 206.30 cents. With natural rubber production typically declining between February and May, prices are expected to continue rising soon.
The EU’s new forestry regulation and prolonged high exchange rates further pressure rubber prices and raw material import costs.
Concerns have been raised that international natural rubber prices may fluctuate in the second half of this year as the European Union’s (EU) “Deforestation Regulation (EUDR)” takes effect this December. The EUDR prohibits the import and distribution within the EU of seven products—palm oil, beef, coffee, cocoa, soy, rubber, and timber—as well as their processed goods if they were produced on land deforested after December 2020.
The regulation was initially set to take effect last December but was postponed by a year due to insufficient preparation. The limited number of EUDR-certified producers in key rubber-growing regions like Thailand and Malaysia was cited as a major factor behind last year’s sharp price increases. Industry experts warn that a similar surge could occur as this year’s implementation date approaches, despite a growing number of certified plantations.
Adding to the pressure, the persistently high exchange rate—hovering around KRW 1,400 per USD—has further motivated tire companies to raise prices. Key raw materials such as natural rubber and carbon black are imported from Southeast Asia and traded in dollars.
Although these three tire makers generate about 90% of their sales from overseas and generally benefit from a weak won, prolonged high exchange rates can become a double-edged sword. If rates remain elevated for more than three months, companies exhaust their stockpiled raw materials and must import more, potentially eroding their operating profits.