The Rise of the Cheapies

With the largest auto population in the world, the U.S. travels on rubber--and each wheel means a sale for some tire manufacturer. The fight to make that sale has led to one of the biggest price wars in years. The main weapon in the war is a new, low-priced tire known in the trade as a "cheapie," which sells for as little as $6.95 v. about $25 for a standard quality name-brand tire. The stakes are big: the tire industry sells some $3 billion worth of tires a year. The contestants are many: more than 115 brands of tire are now on the market. The tire price war has grown so fierce that it is about to be debated in Congress, where a bill will be introduced to establish federal controls to ensure standardized quality and labeling for U.S.-made tires.

The war really began when dozens of big nonrubber companies, ranging from discount merchants (Korvette and White Front) to department stores (Macy and May), decided to invade the lucrative field with their own cheaper private brands--and thus revolutionized the staid tire business. Detroit still equips its new cars with name-brand tires, but two out of every five replacements now bought in the U.S. are private brands.

Instead of resisting the trend, the nation's five major tiremakers decided to join it, and now produce most of the cheapies themselves, often unknown to the buyers. U.S. Rubber, one of the biggest, makes such tires as Flying A, Atlas and Davis in addition to its prestigious U.S. Royals. Goodrich makes and markets Vanderbilts and Diamonds; Firestone makes Daytons and Cities Service; and Goodyear has just won the contract to make Foremost tires for J. C. Penney, which recently entered the auto-supply field.

Private brands generally cost from 30% to 50% less than name brands.

They contain less rubber, have thinner treads and inner cores of lower-grade material, and are generally built to less demanding specifications. Are the cheapies safe? The tire manufacturers insist that they are--so long as they are used only for driving about town at moderate speeds and not on constant or long highway trips. Alabama's Democratic Congressman Kenneth Roberts, who is sponsoring the tire bill in Congress, is afraid that most tire buyers do not know this. He wants a law that will make companies say why a cheapie is so cheap.

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