That Little XTRA
The market for cast aluminium wheels is reaching saturation point. While the low-volume, image focused brands are defending their territory in a crumbling segment, the mid-price segment has almost disappeared. At the same time, while the low-price segment may continue to move significant volumes of wheels, branding is to a large extent interchangeable. Alloy wheels may still be most common tuning part, but that’s just it. Being the most frequently upgraded part means that it loses its exclusivity. Cast aluminium wheels have become a commodity and in some cases are already cheaper than steel wheels. The exceptions are two or three piece and particularly large-dimensioned wheels. Sizes referred to as tuning sizes have continued to go up. 17 inch is no longer a rarity, so 18 inch and above is where the more focussed volumes can be found. In combination with an expensive tyre, prices can be expected to reach what one might pay for quite a tidy used car. Nevertheless, there is still an exclusive clientele to which these high-value products can be marketed. In this quantity-limited segment, competition is to a large extent limited to names that hold high levels of brand equity. Other selling points are technological features such as multi-piece design, cavities or flow-forming for weight minimisation, special high polish coatings (chrome or “like-chrome,” high gloss, nano-technology) as well as the forging procedure. Forged wheels have been around for almost four decades now and first appeared on the Porsche 911, the “baroque wheel” for Mercedes (another forged product) followed and should also be regarded as a classic. Despite the obvious product advantages regarding weight, compared with cast wheels, the particularly elegant appearance of the conventional forged wheel means it generally only appears on premium brands vehicles like: Audi A8, BMW 5 and 7 series, Aston Martin Vanquish, Mercedes S-class and Maybach. But these wheels are expensive and so in order to make them accessible to owners of less expensive vehicles German company Otto Fuchs invented the light-weight forged wheel. This became a sales success in the original equipment market particularly with the Audi (A3 to A8) because it was used as a “basis wheel” and was not so expensive for the wheel manufacturer. The BMW 3-series, Mercedes E-class and the extremely weight-optimized wheels for Volkswagen’s Lupo 3L and Audi A2 should also be mentioned. Light weight forged wheels do not play much of a part in the replacement market, but have circulated the segment as part of the spare market. Similarly the conventionally forged wheel has yet to gain a strong foothold on the market and continues in something of a niche existence. This is due to the fact that the few companies that offer this kind of product are generally priced out of the market. But that is not to say that these products are not worth the money – producing forged wheels requires more investment and is much more expensive than wheels manufactured using the casting procedure. Forged wheels are produced using a set of forging and/or transforming roll pressing measures. So-called “forgeable alloys” of aluminium (such as AIMgSi1) are also necessary, as opposed to the conventional AlSi7Mg and AlSi11 alloys that cast wheel producers use. The time is ripe Coming from the technical side of the business, Peter-Werner Frischkorn is aware of the inherent difficulties associated with communicating the superior characteristics of forged wheels over cast products. The outstanding surface quality with production-immanent, blowhole-less and nonporous structures in combination with high gloss polishing or alternatively chrome plating is obvious, there must one only place a painted wheel beside. The weight advantages are also clear and easy to demonstrate – a 17-inch wheel, for example, is around 40 lighter. You only have to lift both wheel types side by side to see, something that means the products continue to be “sellable.” That’s why Frischkorn and partners founded XTRA Wheels AG, based in Germany, to ensure that these products would continue to be offered in the future. Frischkorn is not interested in competing with the cheaper cast aluminium wheel market. But exclusive technology at a reasonable price should be able to find a place in the market. In other words the strategy is to compete in the premium segment at the lower end of the pricing bracket. However the company founder is aware of his brand’s main weakness, currently brand awareness of the XTRA name is near zero in the trade and that certainly has to change. To do this Frischkorn has called on the experience of well-known wheelman, Jens Klausdeinken, to be XTRA’s face in the market. Salesmen might describe it use a wheel’s multi-piece design as selling point, but it can also be a negative characteristic. Frischkorn: “Saying that multipiece wheels offer a price advantage due to the changeability of the ring is absurd in view of the fact that the price for a new ring is on a similar level to the low-priced aluminium cast wheel.” In order to ensure availability, the newly created XTRA team has already rented a warehouse. Co-shareholder Peter-Werner Frischkorn will be the chief executive officer, since the owners decided to form the business as a public company. The names of the supervisory board members - Yam Hong Stephen Tsui and Yam Ming Tsui - betray, who the partners are. The Tsui brothers are from Hong Kong and have their own (currently not represented in Europe) aluminium casting wheel brand (Gacosia) and cooperate very closely with up-and-coming enterprise China Wheel. China Wheel was a minor shareholder at the forged wheel manufacturer FullChamp Technologies Co. Ltd. headquartered in the Chu Shan industrial estate in Taiwan. But, as China Wheel president Derek Zhang told Tyres & Accessories, the company already has the right to distribute FullChamp wheels. In the meantime China Wheel had bought its Taiwanese partner. FullChamp is a relatively young company, which was founded in the summer of 2002 by Mike Wie. Since then the company’s turnover has soared to double digit millions of euros. It should be pointed out that the business, which employees 150 people, also produces other forged products in addition to wheels. However wheels remain core business for the company. The fact that FullChamp has a current annual capacity in the region of 150,000 means that even at this early stage the company has an amazing product range. In addition to passenger car forgings, truck, motorcycle and even ATV and go-kart wheels are forged. Manufacturing volume can be developed up to 25,000 per month relatively problem free, reports Zhang. But that would mean doubling current capacity. For this push to take place, amongst other things, XTRA will have to take care that all FullChamp manufactured forged wheels are exclusively for the aftermarket. In answer to the question of why a cast wheel manufacturer like China Wheel wants to market forged wheels, Frischkorn answers: “Our Chinese partners think strategically and on a long-term basis. If we do a good job as a marketing company and are able to establish the brand reasonably, then China Wheel will have a way into Europe to sell its cast wheels through the structures we establish.” This provides the opportunity for a second line brand that could be placed alongside or below XTRA. “However these are purely ideas,” Peter-Werner Frischkorn adds. And at the moment they cannot materialise. China Wheel currently is running at full capacity in order to serve the US aftermarket. This outstanding export market demands approximately 90 per cent of the company’s production. In fact the company can hardly satisfy all inquiries. Zhang estimates his company’s share of the US Wheel aftermarket to be more than 20 per cent. And he believes his company has not yet exhausted its potential. The wheels “made in China” are branded with the names of the companies US partners it has off-take agreements with. And this is a business model that Derek Zhang can imagine being established also in Europe on a mid or long-term basis - the low-priced but quality orientated producer working together with a locally based team with the necessary market knowledge. And so project XTRA begins.
Continue ReadingThe Bearish Bear
Some Russian stocks are either under-performing or were overvalued at their initial public offerings. There have been some notable successes in the market recently like Novatek a Russian gas company which raised $966 million at its IPO and has seen its share price rise 150 per cent since then. Unfortunately for the tyre business, Amtel-Vredestein has not faired so well.
Continue ReadingWill Continental Retreat from the North American Market?
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Continue ReadingGoodyear Opens New DC For Central Europe
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Continue ReadingMichelin Launches New Fuel Efficient SUV Line
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Continue ReadingThe Ferrari Challenge Trofeo Pirelli Comes to Silverstone
This weekend (5, 6, 7 May 2006) the Ferrari Challenge Trofeo Pirelli starts the European Championship at the home of British Motorsport in Silverstone. Featuring 50 of the all-new Ferrari F430 Challenge racing cars it will be an action-packed weekend as the Ferrari drivers have the first chance to see how the new car will match their driving style in a tough competitive environment with drivers from across the world.
Continue ReadingGerman Magazines Applaud Fulda Progresso’s Test Performance
The Fulda Progesso performance summer tyre has won two categories in the latest summer tyre test of German magazine Auto Motor und Sport, part of Europe’s most popular network of car magazines. Ranking first, in two critical areas: ‘traction and ‘aquaplaning,’ Fulda Progresso beat off strong competition from 10 other tyre brands achieving 20 out of 20 in aquaplaning and 10 out of 10 in traction.
Continue ReadingKumho Adds New Performance Patterns
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Continue ReadingGoodyear Has Record First Quarter
Goodyear Tire & Rubber Co. reported a net income of $74 million for the first quarter of the year against record first quarter sales of $4.9 billion. Sales for the quarter were up 2 per cent compared to the same period last year, while the net income results were up 9 per cent versus the first quarter of 2005. Sales declined 5 per cent in the European Union Tire business compared to the first quarter of 2005, which was the strongest first quarter in the units history. Price and product mix improvements were not enough to offset unfavourable currency translation of approximately $98 million and lower volume in the consumer replacement market.
Continue ReadingCooper Launches New Winter Tyre
In preparation for the upcoming winter season, Cooper Tire & Rubber Company Europe Ltd. has launched the Weathermaster Snow, a brand new winter tyre range. Designed to cope with the gruelling demands and rigours of winter motoring, the Cooper Weathermaster Snow comes in a variety of sizes to fit most small to medium vehicles, from the Peugeot 107 to the Volkswagen Golf.
Continue ReadingCooper Names Formula D Drivers
(Akron/Tire Review) Cooper Tire & Rubber Co. has selected its team of drifters for the Need for Speed Formula Drift (Formula D) drifting series. Casper ”Da Ghost” Canul and Matt Vassallo and Rob Fleming from Team Enjuku will lead the drifting team. Cooper will supply the drivers with Cooper Zeon 2XS, Zeon ZPT and Zeon Sport A/S tires.
Continue ReadingAvon Tyres Launches New Web Site
Avon Tyres is promoting its online brand exposure with the launch of a new web site, accessible at www.avontyres.com The new site streamlines the tyre selection process, and provides a comprehensive guide to Avon Tyres and their extensive list of products.
Continue ReadingNew OE Deal Cements Hankook’s High Performance Credentials
From February of this year, Hankook tyres are being fitted to the fifth generation Golf. The Volkswagen Golf has been the single best-selling model of car in Western Europe since the first generation debuted in 1974. Hankook will supply the high performance Ventus Prime K105 205/55R 16. Furthermore since Hankook moved into its purpose built warehouse complex, high performance stockholding has more than doubled, company representatives told Tyres & Accessories.
Continue ReadingNew High Performance Viking Pattern
The Viking tyre range has been further enhanced with the introduction of the new Protech II pattern, replacing the current Protech 500. Exclusively available from Viking International, the Protech II’s asymmetric pattern is said to be the perfect combination for wet and dry conditions.
Continue ReadingFood Transport Fleet Benefits from Regrooving
David Price Food Services Ltd is enjoying an average 27.8 per cent increase in mileage performance from each of the Michelin drive axle tyres on its fleet of 26 commercial vehicles by regrooving them in-line with Michelin’s recommendations. According to the manufacturer, the company fits new Michelin 295/80 R22.5 XZE 2+ and XDE2+ tyres as standard across its fleet, with each tyre regrooved by the local ATS Euromaster branch when the tread depth reaches two to three millimetres.
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