Nexen Tire is consolidating its three European bases -- Czech Republic, Germany, and Italy -- into a single Czech corporation. This initiative aims to streamline business operations by centralizing dispersed bases within Europe. There is keen interest in whether Nexen Tire, which encountered setbacks in the United States and the Czech Republic last year, will expedite the normalization of its overseas operations through this business restructuring.
According to industry sources on March 20, Nexen Tire’s German and Italian subsidiaries have transferred their operations to the Czech Republic following a board resolution. The German and Italian subsidiaries are currently undergoing liquidation procedures. This move effectively centralizes Nexen Tire’s bases in the European market under the Czech corporation.
Industry insiders speculate that Nexen Tire’s integration is partly driven by the completion of the expansion of its Czech factory. Nexen Tire invested 1.2 trillion won (US$895.19 million) in establishing and expanding its Czech factory, completing the expansion last year.
An industry insider stated, “The merger of the underperforming German and Italian subsidiaries with the Czech corporation appears to be aligned with the expansion of the Czech factory to address sluggish local sales.”
The normalization of operations in the Czech Republic and the United States is a challenge that Nexen Tire must address. Despite recording a net profit of 103.1 billion won last year, Nexen Tire’s subsidiaries in the Czech Republic and the United States turned into deficits.
Nexen Tire’s U.S. subsidiary recorded a net loss of 15.3 billion won last year, turning from a net profit of 22.1 billion won in 2022. Meanwhile, the Czech subsidiary saw its net profit decline from 13.2 billion won in 2022 to a net loss of 13.4 billion won last year.
Industry experts believe that there is a high likelihood of Nexen Tire to normalize its operations in the United States and the Czech Republic this year. This optimism is fueled by the anticipated full operation of the expanded Czech factory. Additionally, there is a positive outlook for the U.S. subsidiary of Nexen Tire, especially with expectations of a reduction in tariff rates this year, which would offer opportunities for improvement and growth despite previous hindrances from anti-dumping tariffs.
Nexen Tire aims to expand its overseas market sales by establishing bases in North America and the Czech Republic. With efforts to boost the operation rate of the Czech factory, the company plans to invest US$1.3 billion to build a North American factory in one of eight southeastern states of the United States. The target operational timeline for the factory is set for 2028 to 2029.
Among Nexen Tire’s overseas subsidiaries, the Czech subsidiary recorded the highest sales volume last year at 799.7 billion won. Following closely, the U.S. subsidiary reported sales of 774.6 billion won. The combined sales of these two subsidiaries amount to 1.57 trillion won, accounting for 58.3 percent of the total sales of 2.7 trillion won last year.