The UK arm of global tyre giant Hankook has warned drivers are turning to lower quality products as they battle the cost of living crisis.
However, the switch failed to dent the company’s performance in 2023 with sales rising from £147.5m to £168.6m, according to its latest accounts.
But the results, which have been filed with Companies House, do show that Hankook slipped from making a pre-tax profit of £1.9m to a loss of £966,547.
Hankook’s UK arm is headquartered in Northamptonshire and its tyres are imported from the company’s factories in South Korea, China, Indonesia and Hungary.
Drivers “forced to revise their purchase habits”
A statement signed off by the board said: “The demand of UK tyre market stayed the same as 2022 in general. However, Europool demand in 2023 decreased by five per cent vs 2022 mainly due to [an] increase in the volume of non-Europool registered imported tyres to the UK market.
“As shipping cost from Far Eastern countries like China has come down, the volume of imported tyres increased by double digit vs 2022.
“Continuous increase in the general cost of living and energy costs have continued to make consumers, including fleets, being forced to revise their purchase habits and buying lower tier brands of tyre despite potential performance differences.
“Market competition is getting stronger as channels continue to be consolidated by larger groups, with some businesses looking for exit strategies, and others are looking for more control of distribution.”
Hankook added that the demand for all season tyres has “accelerated quicker than initially anticipated”, up 15 per cent compared to 2022.
The company also said that there has been “consistent growth” in SUV and 4X4 tyres linked to the popularity of those car models with the UK public.
The business added: “Hankook saw some loss of market share in budget market, mainly due to the loss of sales in private labelled products dedicated to specific customers, which was caused mainly by shipping disruption and strong price competition.
“However, recovery and growth in Hankook’s flagship product brands resulted in Hankook gaining market share overall and increasing sales revenue and achieving an acceptable growth.
“Hankook has gained market share in the truck/bus sector, mainly due to improvement of supply chain and strong partnership with fleet management solution companies and commercial dealers.
“Hankook has been able to increase a strong footprint in the UK market to serve the needs of our dealer network and to support its fleet business.”