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January 20, 2003 01:00 AM

Wheels of missed fortune

Lindsay Chappell
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    Consumers want hot wheels on their new cars. Auto dealers want to sell the wheels that customers want. Auto makers want to supply the wheels that auto dealers want to sell. Specialty wheel manufacturers want to make the wheels that car makers want to supply.

    So why is the boom in wheel and tire upgrades largely eluding auto dealerships?

    Blame it on the realities of new-vehicle retailing. Few car and truck franchises are equipped physically to handle a regular wheel and tire trade since wheel retailing requires warehouse or storage space that few car dealerships have or want. And, boom or no boom, the brand-sensitive auto makers are not keen to sanction a proliferation of below-the-skirt product appearances.

    That leaves many vehicle retailers on the sidelines of a lucrative business, acknowledged Chuck Fortinberry, a Chrysler-Jeep dealer in Clarkston, Mich.

    ``When it comes to appearance, the wheel is king,'' he declared. ``Especially for kids. A car with bigger tires and wheels is just a better-selling car.'' But Mr. Fortinberry realizes knowing that and making it happen are different things.

    In recent years, the Jeep dealer has ventured into the wheel game. He watched young customers drive off his lot with low-level vehicle packages, only to show up a few thousand miles later with the same truck retrofitted with more expensive wheels and bigger tires, bought elsewhere.

    Mr. Fortinberry began doing the upgrades himself. The advantage was obvious, he concluded: By buying the upgrades at the time of the purchase contract, customers would be able to finance the aftermarket enhancements through the purchase agreement. Mr. Fortinberry would sweeten his profit margin.

    The Jeep Liberty Sport has been one target. The Sport arrives on the dealer's lot with inexpensive painted steel rims. Mr. Fortinberry replaces those with alloy upgrades at a cost of about $200. Customers pay the dealership roughly the same price they might pay an aftermarket retailer down the street.

    Not pushing upgrades

    But Mr. Fortinberry's dealership has not been pushing the effort lately. Leasing companies no longer include aftermarket wheels in the residual value of a vehicle, making upgrades a tougher sell to customers who want to lease. For Mr. Fortinberry, that was about 85 percent of the customer base.

    Previously, a new set of high-profile ``corners'' might push up the monthly lease payment only $5 to $10 a month, he recalled. On some minivans, the dealership was able to reduce lease payments with the installation of a hot wheels package.

    Now, according to Mr. Fortinberry, the larger question is whether a car dealer really wants to bother.

    ``Are you going to stock a full inventory just to let customers look over the selection?'' he asked.

    Paul Taylor, industry analyst with the National Automobile Dealers Association, said competing for accessory business against full-line aftermarket retailers requires an investment in inventory that few car dealers are willing to make.

    A big aftermarket biz

    That's too bad for most car and truck dealers. Wheels, rims, performance tires and suspension components accounted for more than $6 billion of the $26 billion that Americans spent on aftermarket accessories in 2001, according to the Specialty Equipment Market Association (SEMA).

    Wheel and performance tire vendors represented a large share of the more than 1,400 exhibitors at SEMA's annual trade show last fall in Las Vegas. The trend of ``plus-sizing'' wheels-putting larger tires on a vehicle than it was intended to carry-has become so prevalent that SEMA publishes a service shop guide to help technicians avoid unintentional operating problems caused by taller and wider tires.

    SEMA spokeswoman Rosemarie Kitchin said wheel and tire changes typically are occurring soon after new vehicles are purchased. ``Our research shows that buyers tend to spend money on tires and wheels in the first 90 days after acquiring the vehicle,'' she said. ``That may be money the (car) dealer is leaving on the table.''

    The interest level is obvious. Tim Shaffer, vice president of sales and marketing for wire rim producer Dayton Wheel Concepts Inc., is developing a car dealer program that would give auto retailers better access to Dayton's wheel catalog. The company is pursuing the retro look in vehicles, targeting such nostalgia-flavored models as the Ford Thunderbird, Chevrolet SSR and Chrysler PT Cruiser-and doing so through the retailer.

    But Mr. Shaffer acknowledged that he and other wheel purveyors still face a cool reception from auto makers. Specialty wheel makers traditionally have operated outside the OE universe, and car makers tend to perceive them as somewhat less than suitable partners, he mused. ``They looked on us as a fly on the elephant's butt,'' he said. ``We were just a necessary evil.''

    Changing attitudes

    Mr. Shaffer and others are convinced the auto makers' attitude toward wheel accessorizing is changing, although not dramatically. Some luxury-brand models are offering customers a choice in wheel size. The hot new BMW-built Mini Cooper uses a 15-inch standard tire but offers a 16-inch option, and the Cooper-S comes with standard 16-inch wheels with a 17-inch option.

    Nissan's new Z sports car offers an 18-inch option. Even General Motors Corp.'s new H2 Hummer offers a plus-sizing option. Such options will be more common in the industry, but they are a crack in the door to the larger trend of vehicle personalization and accessorizing. That probably won't widen anytime soon, predicted Bob Triulzi, general director of accessories for GM's Service and Parts Operations.

    GM and its brand managers are not going to approve a catalog of accessory items without putting the suppliers through the same lengthy scrutiny and testing that all of GM's other original-equipment suppliers undergo, Mr. Triulzi said. His words are echoed at Ford Motor Co.

    ``Some of our dealers sell aftermarket, but we really don't support it,'' said Scott Eldridge, alternative service manager at Ford. ``If something's going to be offered by the company, it really has to meet all of our standards-for quality, safety, performance, noise and vibration, and everything else we measure for.''

    In recent years, Ford and GM have encouraged their retailers to get into tire replacement to stimulate service department business-not as a tool to help market new vehicles. Consumers who need tires tend to have their vehicles serviced at the same time and vice versa. About 3,000 of the nation's 4,500 Ford, Lincoln and Mercury dealers participate in Ford's ``Around the Wheel'' tire-replacement program. Mr. Eldridge expected the program to sell about 2 million tires in 2002 and 3 million this year.

    But he noted that the tire trade is not second nature to auto dealers. Many have to make a commitment to warehouse tires, and all of them have to make a commitment to market their tires aggressively-something Ford has tried to encourage.

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