Kumho Tire Co. has temporarily halted all operations at its Gwangju plant in South Korea after a major fire ravaged 50-60% of the production lines in one of the facility’s two primary buildings. This unexpected disruption threatens to end the company’s four-year streak of record-breaking sales.

The fire began around 7 a.m. on Saturday in the area where raw rubber is mixed with chemical compounds. It was contained by Sunday afternoon, according to South Korea’s National Fire Agency. The incident left one person and two firefighters injured. The Gwangju plant, situated about 300 kilometers south of Seoul, has the capacity to produce 12 million tires annually. This represents roughly 20% of Kumho’s global production output of 65 million tires, which comes from facilities in South Korea, the United States, China, and Vietnam.

The plant specialized in high-margin, premium tires under the Ecsta Sport brand, including models for electric vehicles and 18-inch tires for luxury SUVs—products that sell at a premium of 20-40% over standard tires. The strong demand for these tires has been a key driver of Kumho’s consistent sales growth since 2020. In the first quarter of 2025 alone, the company reported its highest-ever quarterly revenue, earning 1.21 trillion won ($864 million). It had been aiming for a record annual revenue of 5 trillion won this year.

In response to the fire, Kumho is considering transferring part of the Gwangju production to its facility in Gokseong, also located in South Jeolla Province. This alternative plant has a slightly higher production capacity, but with existing plants already operating at full capacity, scaling up quickly to compensate for the loss may prove difficult. This challenge poses a significant risk to achieving the company's ambitious sales goals for 2025.

Plans to relocate the Gwangju facility to Hampyeong have stalled, and while Kumho is exploring the possibility of establishing its first European manufacturing site in Poland, Serbia, or Portugal, such developments will take time to come to fruition.

According to the KED Global, an industry insider noted that the fire, combined with recent 25% U.S. tariffs on imported vehicles, could significantly impact Kumho's earnings this year. The company will decide whether to resume production at the Gwangju plant later this year. Although no major carmakers, including Hyundai and Kia, have reported supply disruptions so far, a prolonged shutdown may prompt them to seek alternative suppliers. This could benefit domestic competitors like Hankook Tire and Nexen Tire, especially as Hankook has already restructured its own production in response to a fire last year.