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The speed rating of a tire indicates the speed category (or maximum range of speed) at which the tire can carry a load under specified service conditions. It also is used to provide the expected steering response engineered into the vehicle by the manufacturer.
The Original Equipment (OE) speed rating should be followed whenever possible. Often times, the desired replacement tire is not available in the OE speed rating. (i.e. when selecting winter tires) In this case the highest available speed rating is the desired replacement.
If the replacement tires are different in speed rating than the OE tires then the maximum speed capability of the vehicle is limited to the lower speed rated tires, and the handling characteristics of the vehicle will be compromised, at all speeds.
Note: If the OE recommended speed rating is not followed, it can often times lead to accelerated or abnormal tire wear.
The History of Speed Ratings?
We can thank Germany's famous Autobahn for tire speed ratings.
Tire speed ratings range from A (the lowest) to Y (the highest). But the chart is not completely in alphabetical order.
For example, H is between U and V, with the common perception that H stood for "high performance" at one time.
As manufacturers continue to add speed to their vehicles, tire speed ratings evolve to match the speeds.
For example, Z was the highest rated speed at 240 kph+ until W & Y were used to match the higher speeds of exotic sports cars.
Source Michelin North America (Canada) Inc.