Quote:
Originally Posted by mav1178
Let's get a few things out of the way:
a lot of brands are not made in Japan.
a lot of brands have their products cheaper/available because it might be purchased from Japan, but shipped from somewhere else in Asia.
every brand plays the exchange rate game.
what destroyed a lot of brands was the 2008-2010 period when the financial crisis caused not only the JPY to skyrocket vs the USD/Euro, but it also made purchasing from other parts of the world unstable. Add in a severe recession and a huge drop in demand of parts, and it pushed several companies out of business or out of the US market entirely.
a lot of wheel brands use contract manufacturers. the actual number of factories is quite low, because economies of scale dictate that these factories need a certain minimum volume to keep the lights on. no one will invest the millions needed to start a brand, so they rely on this system to make new brands, new wheels...
at the end of the day, it only works if you can make the math work.
40' container holds anywhere from 300-450+ wheels depending on size. let's use 400 wheels per container, 100 sets.
100 sets @ $75 each wheel for cast wheels is around ~$30000. Add on approx. ~$6000 to ship the container + the duties/fees/handling from, say, Taiwan. you're almost $40k for 400 wheels
Landed cost of about $100/wheel.
Let's say it's a cheap wheel, about $300 each MSRP. Dealer cost is 30% off MSRP, WD is 40%. Let's say you sell 70% to WD and 30% to regular dealers, that's $50400 in WD revenue and $25200 in dealer revenue, about $75k in revenue per container and about $25k in gross profit per container.
That's a lot of money, right?
Factor in employees, cost of warehouse rent, overhead, advertisements, etc etc... and you suddenly have a few thousand net profit after all said and done.
And now repeat this 12x for a year...
When I was at 5Zigen the only way we made the numbers work was to import a TON of stuff. Stuff from Japan. Stuff from Taiwan. Stuff from China. Stuff from Vietnam. The goal was to hit target revenue with target margins, but it is so incredibly difficult to pull off given that the wheel market is not as big as people make it out to be, especially given consumer preference and market trends.
During our peak, we maybe received about 2-3 containers a month. We could've done more but then you start oversaturating the market, and dealers are unhappy.
Wheels are now a medium volume market, and the pricing and brand availability reflects that...
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Hey man, good breakdown - but I never said most wheels (or parts) were made in Japan or some of the other stuff, unless you were just using my original post and generalizing for others, which I get. Just want to make sure you weren't targeting me on that.
I understand the stuff for sure, and part of what has led to it. Truth it, part of what I do is similar but regarding a different industry.
Today though, many new brands have popped up, as you know. My original comment was just highlighting a hole in the market. There are cheap wheels out there, sub 1k, but they aren't original or cool. That's a shame. There are cool wheels in good sizes still left and being made, but they tend to insanely mark them up (IMO).
There should be a mid spot, and there have been some options discussed here. There is no doubt the economy is far different than back in the day, when many of us entered the scene (for me, around 03). But that doesn't really excuse the massive hole from the 1 - 2k range IMO.
That's pretty awesome you worked for 5zigen! I am sure you still follow them, but they do occasionally come out with some ok designs / sizes, but unfortunately the RWD market seems to have been largely left behind over the past decade by them.
Enkei is a wonderful example brought up here by people. I don't give them enough credit because I always feel like their wheels fall slightly short of super cool. They either are not concave enough, or not unique enough. If Enkei would just step the concavity up a tad bit, I would be more willing to rock some of their current offerings lol.
Anyway, again - thanks for the breakdown of stuff. You generally do a great job of offering insight for subjects such as this. I always look forward to reading them!