Nexen Tire’s weaker product mix is widening its profitability gap with Hankook Tire and Kumho Tire, as the company lags behind its rivals in the shift toward higher-margin, high-inch tires, according to data and industry officials, Monday.

Nexen Tire was the only one of Korea’s three major tiremakers to report a decline in operating profit in the April-June period from a year earlier. Hankook Tire’s operating profit jumped 58 percent, while Kumho Tire posted a 24 percent increase.

Industry officials said differences in product mix are emerging as one of the main reasons behind the widening gap.

The shift toward larger tires is closely linked to changes in the global auto market. SUVs and large vehicles have continued to gain popularity, and automakers are increasingly equipping premium models and electric vehicles (EVs) with larger wheels.

EVs particularly tend to require tires capable of handling greater vehicle weight and higher torque, creating opportunities for manufacturers to sell more technologically advanced and higher-value products.

High-inch tires, generally referring to products with wheel diameters of more than 18 inches (45.72 centimeters), typically command higher prices and can generate better margins than smaller tires. They also tend to be more closely associated with premium vehicles, giving manufacturers greater opportunities to strengthen their brand positioning and pricing power.

Hankook Tire raised the proportion of high-inch tires in its sales to 49 percent in the second quarter, helping improve its overall profitability. Kumho Tire also maintained a relatively high share of such products at around 47 percent.

Nexen Tire, by comparison, recorded a high-inch tire sales ratio of only around 38 percent.

The gap means Nexen Tire has a relatively larger exposure to lower-priced products, leaving it with less room to offset increases in raw-material, logistics and other operating costs. This becomes particularly important when external pressures, such as U.S. tariffs, raise costs across the industry.

Nexen Tire does not have a manufacturing facility in the U.S., leaving the company more exposed to tariff risks, while its two rivals operate their own U.S. production lines.

“Product mix is not just a matter of selling more expensive tires,” an official from the industry said. “It determines how much pricing power a manufacturer has and how effectively it can absorb cost increases.”

The issue is also becoming more important, as tiremakers face a changing competitive landscape. Chinese manufacturers are rapidly expanding their presence in global markets, while established Korean companies are seeking to protect margins by moving toward premium tires rather than competing primarily on volume.

“Nexen’s challenge is to increase the proportion of premium products without simply relying on sales growth,” another industry official said.

With U.S. tariff pressures adding to the cost burden, Nexen Tire’s weaker product mix could continue to weigh on profitability unless the company succeeds in increasing sales of high-inch and other premium tires.

“The premium segment will become increasingly important, as manufacturers face higher costs and greater uncertainty in global trade, and competition for EVs and SUVs is rapidly getting more and more fierce among global carmakers,” the official said.