South Korea’s Kumho Tires and Japan’s Yokohama Rubber plan to establish a strategic alliance aimed at strengthening their competitiveness in the global tyre sector.
The initial agreement signed this week is expected to lead to cross-shareholdings between the two companies some time next year. At a more practical level, they plan to collaborate in research and development to help expand their global market presence.
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Kumho and Yokohama are relatively small players in the global tyre segment, with the former ranked 12th in terms of tyre sales revenues last year and the latter ranked 8th. Individually, they do not have the economies of scale that the top tyre companies such as Michelin and Continental enjoy to fund extensive R&D programmes.
Both hope that this new initiative will help reduce the economies of scale gap. As an indication of current priorities, Kumho Tires opened a new R&D centre in Yongin in South Korea’s Gyeonggi Province, focused on developing high-value-added and advanced tyres.
