South Korea's tiremakers are on track for record operating profit this year, riding on Chinese electric-vehicle makers that are aggressively expanding sales in Europe and Latin America and increasingly choosing Korean tires as original equipment. The gains come with mixed feelings, as Chinese EVs pose a growing threat to the broader Korean auto industry.
Combined operating profit at the country's three tiremakers — Hankook Tire & Technology (161390.KS) — through its tire division, Hankook Tire — Kumho Tire (073240.KS) and Nexen Tire (002350.KS) — is forecast at 2.6357 trillion won ($1.84 billion) this year, according to data provider FnGuide on the 26th. That would mark an 8.4% increase from 2.4305 trillion won last year and surpass the previous high of 2.523 trillion won set in 2024.
By company, Hankook Tire is expected to post 1.869 trillion won in operating profit, Kumho Tire 596.9 billion won and Nexen Tire 169.8 billion won. Combined revenue is projected at 19.6314 trillion won, approaching 20 trillion won.
The industry is nearing record earnings despite raw-material cost pressure stemming from conflict in the Middle East, helped by major Chinese EV makers such as BYD and Geely that are pushing into Europe, South Korea and Latin America. BYD sold 283,997 vehicles in Europe through September this year, up 134.6% from a year earlier. Chery's sales grew 255.9% to 260,650 units, while Leapmotor surged 424.2% to 87,922 units.
Hankook Tire supplies tires for the BYD Seal 6 and Atto 3, as well as for Xiaomi and Leapmotor. Kumho Tire counts BYD, Geely and Chery among its customers. Nexen Tire ships tires for BYD's Seal 6 and Dolphin Surf, along with Leapmotor and Baidu. The models the three companies supply are flagship products exported to markets including Europe and Australia, meaning that as Chinese EV makers sell more vehicles globally, the Korean tiremakers' revenue and profit rise with them.
The partnership between Chinese EV makers and Korean tiremakers is not limited to electric vehicles and is expanding into autonomous driving, including robotaxis. Hankook Tire recently widened its cooperation with Baidu's Apollo Go robotaxi platform to 10 cities from four. The company is newly supplying its EV-specific tire, the iON ST AS, in cities including Shanghai and Chengdu.
Nexen Tire has supplied its Roadian GTX, a tire designed for sport utility vehicles, for Baidu's Apollo RT6 robotaxi, which has been in commercial service in Wuhan, China, since 2024.
EV tires are more profitable than those for internal-combustion vehicles. They require higher-grade materials such as sound-absorbing foam, but the added cost is limited while prices run about 15% to 18% higher because the tires are classified as premium products.
The industry expects profit growth to continue for some time in step with the expansion of China's EV industry, given that Chinese tiremakers are growing slowly and lag in technology. Zhongce Rubber Group and Sailun Group ranked ninth and 10th globally by revenue last year, but their low international recognition leaves them dependent on the domestic market.
Brand recognition in the tire business is also slow to change, another factor brightening the outlook for Korean producers. Because tires are directly tied to safety, consumers firmly prefer products with decades or even centuries of proven performance. Michelin and Bridgestone, the top two by global revenue, have held their place among the top tier for more than 100 years.
"Tires are seen as safety components, so it is hard to replace them with Chinese tires just to cut costs, and the European Union's tariffs on Chinese tires have made Korean tiremakers more valuable," an industry official said. "If raw-material prices stabilize, explosive profit growth will be possible alongside the spread of electric vehicles."
