Racy-looking — and pricey — performance tires showing up on many new cars are proving to be the salvation of the tire industry.
"It's the only growing area of the tire business," says Jack Gerken, spokesman for Pirelli Tire North America.
To make cars look sportier, many automakers are adding low-profile, wide-tread "performance" tires, often rated for higher speeds, to big, flashy wheels. This year, 21% of tires sold will be rated performance or above, up from 12% in 2000, Modern Tire Dealer estimates.
"It's the single biggest trend in the industry," says the trade publication's editor, Bob Ulrich. But "some consumers still suffer from sticker shock when they see how much it costs to replace their tires."
Among the pitfalls:
Price. Even though Toyota's Scion tC coupe sells for a relatively modest base price of $16,740, replacing its set of performance tires with a new set of Goodyear Eagle F1 tires would cost $908, according to Goodyear's website.
Scion is the only Toyota that comes with tires that have the highest speed rating. By contrast, a new set of top-quality but 2-inch smaller conventional Goodyear tires for a Toyota Corolla would cost $492.
"We get a lot of 'accidental' high-performance customers," says Goodyear spokesman Jim Davis. "They buy a car that they think is a general automobile, but it has these speed-rated tires."
As wheels have gotten bigger, tires to go with them are more expensive: Pirelli just unveiled a 28-inch tire for Hummers and big SUVs that will carry a retail list price of about $1,800 each.
Endurance. Some performance tires don't last as long as conventional tires. Lexus warns buyers that the tires for its $2,060 17-inch wheel option on its ES sedan "are expected to experience greater tire wear than conventional tires," possibly "substantially less than 20,000 miles."
The popularity of performance tires is boosting tiremakers.
Goodyear has gone from "being up against the ropes" two years ago to having "convinced customers to pay premium prices for newly launched products," says a recent analyst report from Merrill Lynch. Its third-quarter earnings were the highest quarterly result since 1998.
Although Cooper Tires reported a quarterly loss, it cited "improved product mix" — meaning more higher-profit products such as performance tires — as a bright spot, spokesman Roger Hendriksen says.
Also helping tiremakers: brand loyalty. About 45% of owners now buy the same tire when it comes time to replace those that came with their new car, up from about 30% five years ago, says Phil Pacsi, Bridgestone/Firestone executive director of consumer marketing.
The trend is helping retailers, too. "Expanding our performance tire category ... opens the door for customers who were normally going somewhere else," says David Foxwell, tire buyer for Pep Boys. The downside: having to carry more inventory.