It’s Bigger Than You Think!
Now that I have your attention it’s probably a good time to assure everyone this blog will always be SFW (Safe for Work). Sorry to disappoint you, we will not be hosting a discussion related to the enhancement website mentioned in last week’s post. Instead, I would like to address a huge issue that comes up as we help our customers plan vehicle wheel lineups; Chrome Wheels. One thing for sure, you either LOVE them or HATE them. Does anybody even know what it is about chrome that makes people choose sides like this? Can’t we all just get along? The argument might even be worse than Coke versus Pepsi (or Michigan versus Michigan State for my local readers). But regardless of our personal tastes (full disclosure – I do not own a vehicle with chrome wheels), the marketplace ultimately will find a way to decide. So, before you hit the “more” button, lets test your expertise with this quick poll:
Drumroll please………………The correct answer is 22%(1) or approximately halfway between answers 1/5 and 1/4. I probably tipped you off with the titile of this post but even so, how close were you?
I am going to assume you are as surprised as I was the first time I encountered this percentage. I had heard that chrome wheels were only a tiny bit of the market for so long, I took the statement as fact. So why are we surprised that roughly 1 in 4 people who buy new vehicles in North America chose chrome wheels when they are available? As a side note, the Wall Street Journal suggests 1 out of 5 stats is bogus(2), so maybe you are thinking how accurate is this number? I can assure you the marketplace does not lie(3).
With more than 3 million chrome wheels shipped by the car companies last model year, why do we underestimate this very real demand? Is the data publicized? Is the data incorrect? Or perhaps it has been there all along and we just don’t want to believe it? Most likely each is true to some degree but recently Wired Magazine really opened my eyes! According to the article(4), psychologists have proven “we carefully edit our reality, searching for evidence that confirms what we already believe.” In other words we are not as objective as we think. Wow, heavy stuff. Sounds like a good opportunity to help us all recalibrate our beliefs by contrasting some myths with some facts.
Is this what we are moving towards?
Myth #1 – Bright Chrome Wheels are “over”, or any variation such as chrome wheels are “played-out”, “toast”, they’ve “jumped the shark” or “nuked the fridge”(5). This one just doesn’t seem to go away. I have heard it from designers. I have heard it from product planners. I have heard it from sales and marketing and I have even heard it in my own company (full disclosure for those who don’t know – we supply chrome wheels to the automotive manufacturers). I heard it in 2004, and I hear it now. In fact, we continue to see it in some companies’ future vehicle plans and no matter how many times they have tried it before – the marketplace rebels.
Truth: In deference to Mark Twain(6), The reports of the death of chrome wheels has been greatly exaggerated. While it is true that Bright Chrome use on automobiles is a fashion, and fashions come and go, it appears consumer demand for Bright Chrome Wheels is here to stay (at least for the foreseeable future). Obviously we have inside information because we are working on new programs for several customers, but unfortunately that data is confidential. So here’s a few pieces of data we can give you:
- We rarely have a Chrome Wheel Program where demand does not outstrip supply. Of the programs we are producing today, around half have had capacity increases or are in process. Another 20% fully meet their volume objectives. That equals a healthy market.
- In survey after survey a large percentage (~50%) of people still prefer chrome wheels, even over all other finishes combined. The only reason the rate is not significantly higher than 22% is because of things like pricing, packages and availability.
- Chrome wheel percentage has been steady since 2005 at just under 9% of domestically produced vehicles (which equals 22% of the vehicles where chrome wheels are offered).
2011 Ford Fusion and 2011 Chevrolet Malibu
This last fact brings up an interesting comparison between the Ford Fusion and the Chevrolet Malibu. Now before I ruffle any feathers let me just say that each vehicle has its own set of advantages and disadvantages. This is not an attempt to identify either as the better vehicle (especially considering both Ford and GM are customers). I just wanted to point out that currently around 15% of Malibus are produced with chrome wheels while 0% of the Fusions are so equipped. Why? Because the Fusion doesn’t offer a chrome wheel option. Yet they are basically the same size, price, sell in similar volumes and appear to be targeted at the same type of customer. It stands to reason that 15% of Fusion buyers would also chose chrome wheels if they were just available. I would suggest that if Fusion buyers could buy a chrome wheel it would add somewhere around $26 million in additional revenue(7) to Ford’s coffers. The market has spoken, are you listening?
Next Week another hot topic of conversation – To Clad or Not To Clad? That is the Question! A not so subtle review of the benefits of clad wheel technology, and some basic guidelines when it makes sense to offer a cladded wheel, and when it doesn’t.
References:
(1) Based on our in-depth analysis of 2009 Model Year light vehicles produced and sold in North America. 2009 is the most recent year where full data is available. As always, full access to the data, assumptions and analysis is available to our customers upon request.
(2) http://online.wsj.com/article/SB123672828150888771.html
(3) 2009 Model Year: roughly 11 million light vehicles were sold in North America per CSM Data. Of those, 3.5 million offered a chrome wheel option per our internal market research. 22% of those vehicles were purchased with chrome wheels based on our shipments and conservative estimates of competitive products. Your mileage may vary.
(4) http://www.wired.com/magazine/2009/12/fail_accept_defeat/
(5) http://www.urbandictionary.com/define.php?term=nuke%20the%20fridge
(6) according to Snopes http://www.snopes.com/quotes/twain.asp this was not his original statement. He amended it at a later date to include “greatly”
(7) estimated 250,000 annual sales @ 15% chrome wheel option rate at $700/set average revenue
Special thanks to a couple of friends for the Fusion and Malibu picture. If you are in the market for a new Ford I would highly recommend Reggie Haynes at Tom Holzer Ford (248) 474-1234. If your tastes run more towards a Chevrolet, try Jim Mullins at Marty Feldman Chevrolet (248) 348-7000. Just tell them Frank sent you.
The Chromtec Blog 
September 22, 2010 at 17:27
I was way off on the percentage (too low) of the market purchasing chrome wheels and I work with you. Great information presented in a manner that was fun to read.
October 19, 2010 at 00:32
I was also way off. I chose 5%. I had no idea.
October 18, 2010 at 11:53
Frank,
I am finding here that the following three finishes are gaining considerable favor:
Fully polished
Polished + paint
premium coated fully painted.
There may or may not be a lack of data on cladding popularity, but if the vehicle designers don’t want claddings, they will design wheels which do not use them. And they will influence the product plan accordingly.
This could become a reality. And also they may lose favor because vehicle lines are not protecting for them in their future product plan. This may take time to prove out in the market place, but is an important potential shift.
There are designers here who have voiced the comment that they don’t see a place for bright chrome on vehicles anymore. Are they crazy or visionary? Time will tell.
TMS
October 18, 2010 at 14:05
Teri, I want to thank you for your thoughtful (yet somehow scary) comments. We are hopeful that this kind of clear and insightful conversation happens more and more often on the blog. So, with that out of the way, let me try and offer a couple of responses starting with “are they crazy or visionary?” (funny – even the designers I know ask this question all the time). My post this week (http://chromtecblog.com/2010/10/04/question) was based on the premise a bright chrome finish was preferred and covered how best to accomplish that. You raise a valid question about how other finishes figure in the future and I plan to cover that at length in an upcoming post. Here’s a snippet of what’s to come; We will quantify the market for premium finishes. We will look at the increase in non bright-chrome finishes (so far it appears to be in addition to the Bright Chrome marketplace instead of in replacing it). And we will analyze the relative benfits and limitations of each technology. But you are correct that at the end of the day all that matters is what the consumer values.