When a car moves and the tires get into contact with asphalt, there will be friction between the two surfaces. In order to dissipate the energy absorbed from this friction, the rubber molecules break down and release energy as heat in the form of smoke.
Engine oil leaking out of the valve cover or distributor and dripping down onto the exhaust is another possible reason why you have smoke coming out of your wheel well.
Aside from leaking oil coming into contact with the muffler, a worn bypass hose that is leaking coolant onto the exhaust could also be the culprit.
A lot of times when mechanics look at cars and are trying to figure out why smoke is coming out of its wheel wells, they look at the brake system, especially when there is a lot of smoke.
Every time you drive your car, you're running a tiny engine that turns your wheels, but what you don't see are the hundreds of parts that make up your suspension system.
Oil could get into the exhaust system by means of a leak in the cam chain tensioner. It’s usually caused by a worn-out gasket or could simply be caused by a cam chain tensioner that is failing due to old age.