SK Networks Co., the trading arm of South Korea’s SK Group, will enter the tire distribution business and aims to provide more affordable tires by cutting the layers of middlemen in the local distribution market, the company said on Sunday.

The company said it plans to introduce large quantities of low-priced tires from manufacturers without going through the complex distribution system. To that end, the company will establish a new tire team of about 10 members.

Its vehicle maintenance and repair service chain Speed Mate currently sells 10 tire brands. SK Networks plans to import global brand tires that can be purchased only from Speed Mate in a bid to boost its competitiveness in the market.

As its first move, it signed exclusive contracts with U.S.-based Continental Tire and Slovakian budget tire manufacturer Matador to supply their tires in the domestic market. According to the tire industry, Matador`s tires have premium quality but 10 percent to 20 percent cheaper than domestic peers.

SK Networks aims to increase revenue at Speed Mate to the level of Hankook Tire’s retail chain T-Station within three years. Speed Mate, whose sales are mostly from simple repair and maintenance such as engine oil replacement, is providing services at about 170 stores across the country. SK Networks plans to expand the stores to 300 within this year.

Competition in domestic automotive aftermarket industry has recently intensified as non-tire makers are making forays into tire distribution, while tire makers are accelerating maintenance business.

Auto Oasis, the maintenance chain of Korean non-tire maker GS Mbiz, is expanding its footprint. South Korea tire retailer Tirebank, which opened the country’s first tire discount store, saw a 37 percent increase in its sales last year, posting 379.2 billion won ($ 333 million) in 2016. Domestic leading rental car agency AJ Rent A Car acquired tire distributor Tire Bay November last year and supplies tires from three domestic and seven overseas brands.

Hankook Tire aims to turn its distribution network T-Station to multi-brand shops. The conversion will be tested at 14 stores, and then will be gradually expand to 560 stores nationwide. The tire maker also pushes ahead with maintenance business which grew to 20 percent of its annual sales last year from 10 percent in 2005. T-Station has expanded its items available to customers to include batteries and brake pads and plans to add wipers, indoor filters and antifreeze.

By Park Chang-young

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]