Not long ago, I heard Roger Penske, the chairman of the publicly held Penske Automotive Group, tell analysts how his company was propping up profits. And smack in the middle of his presentation, Penske says some of his shops "have paint booths just for wheels."
Paint booths for wheels? What's up with that?
Well, for one thing, there's demand for fancy wheels among the luxury clientele most of Penske's dealerships serve. A set of wheels can run more than $1,000; for high-end luxury cars a single wheel can cost $3,000.
And if there's demand to buy them there's also demand to repair and protect them. So Penske has two more profit opportunities: He can sell tire-and-wheel coverage out of the finance and insurance office, and he can specialize in wheel repair in the service drive.
Penske may not have reinvented the wheel but he's certainly hit on a new profit stream.