Wheel market creeping backBy William Schertz, Senior Reporter
CHARLOTTE, N.C.—After taking a severe beating at the hands of the downturn of the economy in 2008, the U.S. wheel market has been making steady gains, according to American Tire Distributors Holdings Inc. (ATD).
“It's been a slow recovery for sure from 2008. Things are relatively flat from 2009, but starting in 2010 it's been inching its way back,” Brian Moyer, ATD's director of wheel sales, told Tire Business. “If you look at what SEMA (Specialty Equipment Market Association) says, they're saying it's about 5 percent each year in growth. They're estimating 4 percent for last year. I think our predictions are about even with that for last year.”
Unlike the tire business, the wheel segment tends to mirror the overall economy. When the market collapsed, the U.S. wheel business was essentially cut in half, Mr. Moyer noted.
“It was pretty dramatic,” he said. “As you can im-agine, it is 100 percent a want-oriented business. Every vehicle ever made has come with a set of wheels that work really well for the car, so the aftermarket is very sensitive to the economy.
“As the economy has been recovering slowly, so has the wheel business.”
ATD, which sells about $60 million worth of wheels annually, according to the firm's filings with the Securities and Exchange Commission, has been pacing ahead of the market average in the growth of its wheel business, Mr. Moyer said, though he did not provide specific figures.
“We've done very well over the last couple years. We invested in the business as things started to feel like they were going to recover,” Mr. Moyer said.
In 2011, the company launched a marketing alliance with DUB magazine, giving ATD exclusive rights to distribute TIS Industries L.L.C.'s TIS- and Dropstar-brand custom wheel lines. The founders of DUB also are shareholders of TIS.
In addition, the partnership has provided ATD with marketing opportunities through the DUB print magazine, its online and television assets and the creation of the DUB Garage Dealer Program, offered exclusively through ATD.
“It's gone really well so far,” Ron Sinclair, ATD's senior vice president of marketing, said of the partnership. “This category especially is about the brand and the image of the brand. This is a very image-based, almost fashion-based industry. That's why the relationship makes a lot of sense, the branding makes a lot of sense and all the tie-ins have been so successful.”
While the wheel market in general is gradually making a comeback, Mr. Moyer said one of the most surprising things is the return of the light truck segment.
“There're two trends that are growing pretty strong in the wheel segment right now,” Mr. Moyer said.
“One is, oddly enough, the light truck and lifted truck segment of the business. We have really expanded our offering and would consider our offering in that area pretty robust.”
The aesthetics of wheel designs have been changing, too. On the passenger side, Mr. Moyer continued, there has been a strong shift away from chrome wheels and into painted wheels. There are a few reasons for the change, he said.
“(The wheels) tend to last longer in inclement weather regions of the country. The acquisiton cost for a consumer is a lot less on a painted wheel than it is with a chrome wheel,” he said. “What you're seeing is a trend called concave (wheels). For probably the last 10 years the thing in the wheel business was to see how big you could get the lip of the wheel where the tire comes in, and it's totally gone the opposite direction, bringing the design of the wheel all the way out to the face of the tire and then drawing back into the center of the wheel into the hub area.”
Lastly, the trend in plus sizing that was prevalent a few years ago has turned around.
“There's been a shift at the same time to smaller diameters—if not OE size, real close to OE,” Mr. Moyer said.
“It wasn't that long ago that cars would come with 16-inch wheels and (buyers) were going plus six—up to 22-inch or 24-inch—and seeing how big they could get on there.
“That has definitely calmed down in an economy where I think people still want to be unique and express their personality through wheels on their vehicle, but they just don't want to, A, spend $3,000 to do it and, B, sacrifice the ride and the comfort of their vehicle to do it.
“You can do that in a smaller diameter—really change the look of the vehicle and feel good about your car, but get into something you can afford to get into that will feel good while you're driving and will last quite a bit longer,” he continued.
“It's about more practicality.”
Mr. Moyer noted that small diameter tuner parts have stayed consistent in their popularity throughout all the changes.
“I can't say that's a moving trend going forward, but it's a trend that has not let off.”
To reach this reporter: wschertz@ crain.com; 330-865-6148.
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