Nexen aiming for Global Top 10 by 2025
Sponsorship raising tyre brand’s profile in UK and beyond
With new factories in Europe and now also the US Nexen Tire is growing in terms of global production capacity. However, the firm is also investing in developing its brand, especially in terms of football sponsorship. Recently Tyres & Accessories looked into how the company is combining the two in order to meet its goal of entering the global top 10 by 2025.
In 1976 Kettering Tyres paid local football club Kettering Town FC to print its logo on the front of the team shirt. The move caused ructions in what was then known as the first division and didn’t last long, but it did set a precedent for sponsorship that went to the next level this year. 41 years later, shirt sponsorship in the English Premier League (called Football League First Division back then), which brought in £226.5 million in sponsor revenues during the 2016-17 season, is very big business.
In March 2017 Nexen Tire announced that it had become the first official sleeve partner in the history of the English Premier League.
As a result, Nexen Tire’s logo will be emblazoned on the sleeve of Manchester City’s playing shirt for three consecutive EPL seasons, starting with the 2017-18 season. This partnership has also been extended to include this year’s Women’s Super League and League Cup winners, the affiliated Manchester City Women’s Football Club.
“We decided to take things up a notch in our sports marketing strategy because we want to reach European tire consumers in a more direct manner,” said Travis Kang, CEO of Nexen Tire. “Europe is a strategic market for Nexen Tire, accounting for around 20 per cent of our sales, and our success in this region is a very important part of our global business. Utilizing the partnership between Manchester City and Nexen as a key strategic marketing platform, we expect to increase the value of our business globally.”
Nexen sales, market share up for two straight years
Nexen Tire’s 2016 sales in the European market increased by more than 9 per cent year-on-year to around £250 million (381.9 billion in South Korean Won). The growth is said to be continuing this year, with business results for the first half of 2017 up 12 per cent compared to the same period last year.
As a result of this increase, Nexen reports that it has a market share of approximately 1.2 per cent, with sales steadily growing for two consecutive years. This number is expected to increase with the completion of Nexen Tire’s new plant currently under construction in the Czech Republic and expected to begin operations in 2018.
Nexen expects that the production capacity of the Czech Republic plant will be around 10 million units by 2022 when production facilities are maximized. That said, Nexen’s total production capacity is currently around 40 million units and is expected to increase by about 25 per cent to about 50 million units when the Czech Republic plant is fully operational.
In addition, the Czech Republic plant will serve as “the integrated centre of Nexen Tire’s cutting-edge technology” and this means a “technology-focused, environmentally-friendly facility equipped with the latest facilities”. It will be Nexen’s second fully automated plant after its Changnyeong plant in Korea.
This is why, say Nexen representatives, the firm’s tyres have been selected as OE for world-renowned automakers like Porsche. Indeed the quality of Nexen’s OE has also been affirmed by JD Power’s Original Equipment Tire Customer Satisfaction Study, in which Nexen ranked fourth in the passenger car segment for two consecutive years. Considering the fact that Michelin, Pirelli and Goodyear took first, second and third respectively, Nexen’s ranking fourth is noteworthy.
In addition to Porsche, Nexen currently supplies OE tyres for leading global car manufacturers in Europe such as Fiat, Renault, Volkswagen and its Skoda Auto and Seat units.
Next Nexen plans to expand OE tyre supplies to well-known major automobiles especially targeting European automakers. And this, once again, fits into the firm’s vision for the future: vision 2025. “Nexen Tire recently set up a company vision called Vision 2025. Vision 2025 is Nexen’s goal to grow into a global TOP 10 tyre manufacturer with sales of £3.5 billion (around five trillion in South Korean Won) by 2025,” said Travis Kang. “If we become the most beloved tyre brand in the European market, we will be able to achieve Vision 2025 sooner than expected.”
According to the company, foreign investors are already starting to take notice of Nexen’s growth potential in the European market. Mansour, or Sheikh Mansour Bin Zayed Al Nahyan, who is well-known as one of the world’s richest men and the owner of Manchester City FC, is a good example. In July 2017, Mubadala Investment Company (Mubadala), the Abu Dhabi strategic investment fund, where Mansour sits as vice-chairman, signed an investment contract with Nexen.
At the agreement ceremony, Waleed Al Mokarrab Al Muhairi, deputy group CEO & chief executive officer, Alternative Investments and Infrastructure, Mubadala said: “As a high-performing business with significant global growth potential, Nexen represents an interesting investment opportunity for Mubadala Investment Company. Our investment approach prioritizes partnerships with best-in-class global organizations as a key driver of creating lasting value for our shareholder.”
Therefore, in short, the plan is to invest in production capacity and quality at the same time as brand value, moves that have attracted OE supply deals and foreign investment – all with the goal of entering the top 10 by 2025.