[What can be done? /QUOTE]
You can try using a quality leather cream/restorer. The small £3 tubes used for shoes aren't much good - you need something decent. Saddle leather dressing is excellent for leather seats etc..
https://www.thesaddleryshop.co.uk/sc_203_saddles-tack-saddle-care-leather-feed-condtioners
You can also look at 'Woolies' who have been supplying leather renovation kits and trim to the classic car scene for donkeys years:
http://www.woolies-trim.co.uk/
You may want to consider going to some of your local leather or car upholstery shop and seeing what their estimates or recommendations are. The problem you are describing should not be that expensive to fix.
Did you ever end up finding a solution?
Use a hair dryer (carfully..!!) to heat up the spot, and than use a good leather conditioner.
Are you sure it's a leather wheel?
From the picture it looks rather more like a rubber/plastic kind
Here's the photo of the whole wheel. Maybe it will represent the material better.
I use products from Mother's and they have always been great to me. Also there is a company called Furniture Clinic that have local agents which will help you so that you can buy the right stuff or get them to sort it out for you. They do leather sofa repairs etc and they are on Facebook etc.