Nexen plans Czech expansion, US plant to increase capacity and sales over next 5 years

Nexen plans to expand its production capacity by 40 per cent within five years. It plans to achieve this by building a new tyre factory in the United States and to expand its existing Czech factory. According to Korean media reports, Nexens’ factory in Zatec, Czech Republic, will complete the expansion project in September this year, following its 2019 official opening. Progress on the expansion project, which commenced immediately after opening, was delayed by the Covid-19 pandemic. Nexen has invested 1.2 trillion won (approximately £732 million) in the expansion of the Czech factory. Before the expansion, the factory was able to produce 5.5 million tyres per year. After the expansion phase in 2024, the production capacity is expected to be 9.2 million tyres. By 2025, it is expected the production capacity to increase further to 11 million tyres.

Nexens’ production capacity in 2025 is expected to reach 52 million tyres. Among them, the production capacity of the Korean factory and the Chinese factory is 30 million and 11 million tyres respectively. The increase in production is expected to help Nexen narrow the gap in annual output with the other two top Korean tyre makers. Currently, the annual output of Hankook and Kumho is about 100 million and 56 million tyres respectively.

Nexen also plans to invest 1.7 trillion won (about £998 million) to build a new tyre factory in the United States. The US plant is projected to have an annual production capacity of 11 million tyres and is expected to be operating at full capacity in 2028.

“Mergers, acquisitions or joint ventures are among the potential options,” said a Nexen executive, noting that its products are gaining popularity among OEMs thanks to its “high-end strategy.” The manufacturer has focused on providing supporting services for high-end car brands such as Porsche, Mercedes-Benz and BMW in the past few years, and has established partnerships with these premium OEMs.

Taking advantage of the new economies of scale, Nexen plans to grow further and include other global premium car brands into its own supporting system. The tyre maker aims to increase the number of models equipped with it from the current 118 to more than 250 by 2027.

In addition, Nexen expects sales to increase significantly this year, possibly reaching 2.85 trillion won (approximately £1.738 billion), a year-on-year increase of 9.8 per cent. The ambitious goal set by the company itself is to increase sales to 3.55 trillion won (about £2.165 billion) in 2027.