Lexani tires have gained popularity in recent years for their affordability compared to other major tire brands. But this begs the question – how can Lexani offer tires at such low prices without compromising quality and performance?
Let’s take a closer look at the reasons why Lexani tires come cheap.
Reasons For Lexani Tires So Cheap
Here is a list of those reasons for being this tire brand so affordable:
- Lower Manufacturing Costs
- Minimal Marketing Expenses
- Direct Online Sales
- Minimal Research and Development Costs
- Strategic Outsourcing
- Use of Lesser-Known Brand Names
- Focus on Price-Conscious Demographic
Let’s analyze those reasons in detail.
- Lower Manufacturing Costs
One of the main reasons Lexani tires are inexpensive is that the company saves on manufacturing costs.
Lexani tires are made in China, where labor and production costs are significantly lower compared to the US and other Western countries.
Chinese factories often benefit from government subsidies and have access to cheaper raw materials, keeping Lexani’s material expenses low.
Producing tires en masse in China allows Lexani to take advantage of economies of scale.
The more units they produce, the lower the production cost per tire. This lets them pass on the savings directly to consumers through competitive pricing.
- Minimal Marketing Expenses
Unlike big household tire brands, Lexani does not spend huge sums on marketing and advertising. The company employs limited above-the-line advertising like TV or print ads. Instead, Lexani relies predominantly on digital marketing through social media and SEO to reach customers online.
This approach skips the expensive traditional advertising fees charged by agencies, channels, and media publishers. Without these overhead costs, Lexani can retail tires at a fraction of the price of tires from brands like Michelin and Bridgestone.
- Direct Online Sales
Lexani sells directly to consumers through their website instead of supplying to physical tire retailers. This direct-to-consumer e-commerce model eliminates middlemen like distributors, wholesalers, and installers who add markup at every stage.
Selling online gives Lexani better control over the entire value chain. They can pass on the savings from avoiding middlemen commissions and fees to buyers through lower tire prices.
- Minimal Research and Development Costs
Major tire manufacturers invest heavily in tire research and development (R&D) to pioneer new technologies and materials.
Top brands have advanced R&D centers and run countless tests to improve tire performance.
Lexani does not spend as much on developing new proprietary technologies.
The company focuses on utilizing proven existing materials and tread patterns.
This approach skips costly R&D investment, though it limits innovation.
By avoiding new product development costs, Lexani maintains price competitiveness.
- Strategic Outsourcing
To optimize costs further, Lexani strategically outsources certain production processes. For instance, the company may source pre-cured tire treads from a third party supplier. This allows the company to avoid additional overhead costs of running its own tire curing operation.
Selective outsourcing of non-core tire assembly processes to external suppliers in low-cost markets helps minimize expenditures. Lexani can then channel cost savings from outsourcing into cheaper retail pricing for customers.
- Use of Lesser-Known Brand Names
Lexani sources its tires from lesser known manufacturers based in China instead of premium brands. For example, according to industry sources, Lexani tires are produced by Shandong Linglong Tire Company, a mid-sized Chinese tire company.
By sourcing tires from relatively unknown brands, Lexani pays lower wholesale prices compared to sourcing from established global giants like Bridgestone or Continental. This enables Lexani to retail those tires profitably at ultra-low costs to customers under its own brand name.
- Focus on Price-Conscious Demographic
Lexani intentionally targets price-sensitive customers who prioritize affordability.
The company mostly sells rims and tires bundled as wheel and tire packages.
This value positioning attracts budget-minded buyers looking for new wheels at the lowest cost.
Catering primarily to the price-conscious demographic allows Lexani to offer lower-end products cheaply.
The company can sell decent quality tires at rock-bottom prices to customers who don’t demand advanced features or premium standards.
- Lower Quality Standards
Lexani is able to retail inexpensive tires because the company has relatively lower standards for tire quality and performance compared to leading manufacturers. Most major brands benchmark to strict industry safety and handling standards.
Lexani tires are not built to meet top-tier quality criteria. The materials and manufacturing standards are adequate but not as robust as premium tire brands. By delivering just satisfactory quality rather than outstanding performance, Lexani offer substantial savings.
- Minimal Customer Service Investment
Large tire companies maintain dedicated customer support centers and extensive dealer networks to provide assistance and service. Lexani allocates minimal resources to customer service.
The company handles customer communication predominantly via email to minimize staffing costs. Lexani also has limited physical tire installer networks for after-sales support.
Avoiding substantial investment in customer service infrastructure enables Lexani to divert resources into pricing.
- Strategic Profit Margin Targeting
Lexani intentionally targets a lean profit margin on tires compared to industry averages. Where major brands may target 40-50% or higher profit margins, Lexani keeps margins as low as 15-20%.
The rationale is to maximize turnover by selling ultra-affordable tires to price-sensitive consumers. Despite lower margins per tire, Lexani aims to drive overall revenues and profitability through higher sales volumes attracted by the low prices.
By adopting a low-margin pricing strategy, Lexani is able to undercut competitors and attract bargain hunters, even though margins per tire sold are slimmer.
- Lean Company Structure
As a young company established in 2005, Lexani has a relatively flat, lean organizational structure compared to century-old tire giants.
The company avoids the costly overhead of hierarchical bureaucracy with multiple tiers of management.
With less overhead expenses from lower employee count and minimal operating costs, Lexani can price tires competitively.
The company invests more into the product than into management and infrastructure.
The lean company structure also allows Lexani to respond faster to market conditions and make rapid pricing decisions empowered by real-time data.
- Focus on Basic Tire Models
Lexani focuses on basic tire models catering to everyday usage rather than specialty segments like off-roading or racing. The company offers essential tire lines for passenger vehicles and light trucks.
By concentrating manufacturing and R&D on high-volume segments, Lexani achieves better economies of scale. The large production runs result in lower per unit costs. In turn, this lets Lexani price these core models much cheaper than niche tire categories.
- Limited Size Options
Within each tire line, Lexani produces a concise range of sizes covering common vehicle models. The company does not offer dozens of size SKUs per tire model to suit every vehicle make and model.
Offering fewer size variants per tire pattern allows for longer production runs of each size. This results in lower per unit costs. Lexani passes on the savings from higher manufacturing efficiency of limited sizes to customers through reduced retail pricing.
Also Read: Comparison of Pirelli P7 AS Plus 3 And Cinturato P7 Tires.
- Low Inventory Costs
Lexani maintains lean inventories of tires in its warehouses. The company has optimized its supply chain to replenish stock just-in-time based on real demand data rather than stockpiling substantial tire inventory.
This inventory optimization minimizes Lexani’s working capital locked up in tire stock. By reducing inventory carrying costs, the company can retail tires at extremely competitive rates.
- Speedy Adoption of Automation
Lexani has rapidly automated major elements of its manufacturing process using the latest technology. For instance, the company uses automated tire curing presses for improved consistency.
By upgrading to automated machines faster than industry peers, Lexani benefits from greater labor cost reduction and higher productivity. The resulting efficiency gains translate into lower per unit costs and cheaper pricing for customers.
- Strategic Design Choices
Lexani’s tire designers optimize new tread patterns not just for performance but also manufacturability. The company prioritizes simpler tread designs that maximize manufacturing efficiency.
For example, tire molds with lower complexity enable faster production cycles. By strategically engineering tires tailored for high-volume production, Lexani further improves cost-efficiencies.
- Lean Distribution Network
Lexani sells directly to consumers online, eliminating distribution via physical stores. Tires get shipped directly from Lexani’s warehouses to the customer’s doorstep. This direct distribution approach skips dealer network costs.
For installers, Lexani concentrates supplier partnerships in key metropolitan hubs. This avoids the expense of an expansive installation network across the country. The lean distribution strategy contributes to lowering costs for buyers.
- No Advertising or Sponsorships
While major tire brands spend millions annually on sports team sponsorships and advertising, Lexani invests minimally in advertising. The company relies predominantly on digital marketing and word-of-mouth.
Avoiding expensive traditional advertising and promotional campaigns allows Lexani to divert savings into more competitive tire pricing rather than building brand awareness through ads.
Also Read: This Is Why Priority Tire Is So Affordable.
Frequently Asked Questions (FAQ)
Lexani tires deliver satisfactory performance for everyday usage, but they are not comparable to premium tire brands in terms of longevity, safety standards, and handling capabilities. Lexani tires use cheaper materials and manufacturing processes optimized for affordability rather than maximizing quality. They offer decent value for routine driving conditions. But for superior traction, cornering, durability under extreme loads, or high-speed handling, premium brands are a better choice.
Lexani tires generally last around 20,000 to 30,000 miles under normal driving conditions before requiring replacement. This is lower than leading brands which can last up to 50,000+ miles. The shorter lifespan is due to the cheaper rubber compounds and construction materials used by Lexani to keep costs low. Proper tire maintenance like rotations and alignment can help maximize lifespan within these limits.
Lexani sources its tires from lesser-known manufacturers based in China. Industry sources suggest popular Lexani lines are produced by Chinese companies like Shandong Linglong Tire Company. Lexani contracts these plants to manufacture tires branded as Lexani through OEM agreements. The tires are designed by Lexani but manufactured in Chinese factories.
Lexani provides a standard manufacturer’s warranty against defects in materials or workmanship. But the company offers limited mileage warranties compared to other brands. Certain patterns may have a 20,000 or 30,000 miles treadwear warranty. This reflects the shorter expected lifespan of the cheaper tires. For maximum mileage, proper inflation, alignment rotation and avoiding damage are recommended.
Wrapping Up
In closing, Lexani tires manage to retail at ultra-affordable prices by cutting corners in materials, manufacturing, and features. The company targets budget-focused consumers willing to compromise on longevity, performance, ride comfort and other aspects for the sake of paying the lowest possible cost.
While Lexani tires get the job done for basic transportation needs, they do not match the quality of premium brands. However, for shoppers looking purely for the cheapest new tires available, Lexani delivers on that promise.
The company has strategically built its business model around providing satisfactory tires at bargain basement prices.
