Trim out a curve, BlendSrf (with Position continuity on the wheel side.)
Of course it doesn’t look great because I’m not trying and the whole model hasn’t been tweaked with this in mind and there are many other tools you could use, but it’s the general idea.
I’d probably edit the original surfaces to bulge them out to minimize the “work” the blend has to do.
Jim’s method is a good start, and getting a clean result often comes down to how well your input curves flow into the wheel arch. Try using MatchSrf after BlendSrf to improve surface continuity. If you have clean curves, NetworkSrf can also give you more control over shaping that transition. FilletSrf with a variable radius might work too, depending on the look you’re going for. You could also experiment with SubD in Rhino 7+ for more sculpting flexibility before converting to NURBS.