South Korea’s third-largest tire maker Nexen Tire Corp. is set to expand its annual production capacity by 40 percent over the next five years by building a new factory in the U.S. and expanding its facility in the Czech Republic.

According to multiple sources from the tire industry on Sunday, Nexen Tire will complete the expansion work for its factory in Zatec, a city near Praha in the Czech Republic, in September.

The company decided on the expansion shortly after the construction of the factory was completed in August in 2019. However, the outbreak of Covid-19 delayed the plan. Nexen Tire invested 1.2 trillion won ($930 million) to build and expand the factory, which is considered the largest single factory investment in the European country.

With the expansion, the factory will be able to produce 9.2 million tires in 2024 and 11 million in 2025 upon full operations, up from the current 5.5 million.

In 2025, Nexen Tire is set to secure a production capacity of 52 million tires, including 30 million in Korea and 11 million in China. The increased production output is expected to help the company narrow the gap with the country’s top Hankook Tire & Technology Co. with 100 million capacity, and Kumho Tire Co. with 56 million units.

Nexen Tire is also seeking to build a plant in the U.S.

The tire maker announced a plan to build a plant with a production capacity of 11 million tires in the U.S., which is expected to begin full operations in 2028.

To build the plant with an investment of 1.7 trillion won, the company has weighed multiple locations in eight U.S. Southeastern states.

“A merger and acquisition, or a joint factory, is one of the options for the company,” said an official from Nexen Tire.

Nexen Tire’s surge in popularity among automakers can be attributed to its premium strategy.

The company has strategically focused on catering to premium automobile brands like Porsche, Mercedes-Benz, and BMW, leading to successful partnerships with the esteemed automakers.

Capitalizing on its newfound “economies of scale,” Nexen Tire plans to intensify further its efforts in securing global premium brands as customers.

The company aims to expand the number of car models it supplies its tires to, which stands at 118, to more than 250 by 2027.

In line with such impressive growth, Nexen Tire is expecting substantial sales this year, projected to reach 2.85 trillion won, up 9.7 percent from a year ago.

The company has set an ambitious goal of achieving 3.55 trillion won in sales by 2027.

By Lee Yu-sup and Han Yubin

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