Quote:
Originally Posted by DRIFTER-M
Legit curious.
I feel like when Sportmaxx / XXR began dominating the cheap JDM market, much in the way of innovation went to the wayside. Especially in the "affordable" range, from more established brands. They also cornered the market in such a way I don't think we have seen a consistent rise of smaller similar styled wheels since.
The last cool brick that fell (at least in the states ) was losing the licensing to make CST wheels (Battles) in the USA, as that took out a cool looking affordable, albeit overused, wheel option. One of the only ones left really, RIP days of FN01r-c and Hot Wheels wheels.
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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...