Hankook Tire Co. plans to make an $800 million investment to construct its first site in the United States as it tries to take advantage of the continued growth of the US auto industry. Hankook Tire will locate its plant in Tennessee and will have the capacity to produce 11 million tires annually, according to an e-mailed statement to Bloomberg.
It will be the tiremaker’s eighth global manufacturing site and will start its operations in 2016, the company said. The expansion of Hankook in the US comes as the North American auto industry goes through its fastest growth since 1950, according to estimates by Morgan Stanley, which said that in the five years through 2015, carmakers are adding 3.5 million vehicles into their annual production capacity.
Shin Chung Kwan, an analyst at KB Investment & Securities Co., told Bloomberg that Hankook’s new plant signals that it is planning to produce more premium tires and “show its confidence in its brand and products."
He added that the additional capacity will help the South Korean tiremaker build over 100 million units, and help secure and develop its position in the US market. Hankook supplies tires to Hyundai and Kia as well as BMW, Nissan and Toyota, and produces around 94 million units annually at its seven plants in South Korea, China, Hungary, and Indonesia.
Hankook Tire chief executive Suh Seung Hwa said in the statement that the Tennessee plant will allow them “to supply the highest quality tire products that meet fast growing demands from consumers and automakers in the United States."