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.