Hankook Tire mulls price hike in China: exec

BEIJING (Reuters) - Hankook Tire Co Ltd, China's biggest tire maker by market share, is considering an increase in tire prices in China to offset the impact of rising costs of oil and raw materials, the head of the company's China unit said on Sunday.

Choi Jin-wook, chief executive officer of Hankook Tire China Co Ltd, also said the company expected its sales in the world's No.2 auto market to grow some 20 percent this year by sales volume, compared with an anticipated 15 percent growth in the industry.

"The company has not decided on the details. We are considering a price hike, although nothing has been decided," Choi told Reuters in an interview on the sidelines of the Beijing Auto Show.

Choi said the company was also looking for other ways to cut costs such as higher productivity.

Hankook Tire's China unit, which has two factories with annual capacity of 28 million units as of 2007, expects its sales growth may outpace an expected rise in Chinese tire industry, helped by an expanding sales network and more marketing, Choi said.

But Choi was cautious about the future growth of China's auto market, saying higher prices and the government's tightening monetary policy aimed at cutting inflation will eventually reduce demand for cars.

The recent turmoil in the financial markets will also put a brake on car demand, especially from middle and lower income customers, he said.

"The outlook for China's auto market is not that rosy, as there are some signs of a slowdown in growth. The growth is expected to slow to single-digits from 2010 when the market gets saturated," Choi said.

To weather the possible slowdown, Hankook Tire's China unit is expanding premium models to target richer customers, whose purchases are less sensitive to any economic slowdown or financial shock, he added.

Meanwhile, Choi said Hankook Tire was in talks with a luxury car maker in Germany to supply tires, although he declined to provide details.

Since June 2007, Hankook Tire has been supplying tires to Audi that are manufactured in China.

Hankook Tire, which has a 25 percent market share in China, is supplying more than 30 major auto makers including General Motors Corp, Volkswagen AG and Hyundai Motor Co

(Editing by Ken Wills)