Despite lower unit sales, the major manufacturers of car and truck tires are reporting generally increased revenues. They've been able to pass along to customers the increased costs associated with the raw materials needed to make the tires. Profits, though, have been something more hit-or-miss. The question is how long this situation can continue.

Goodyear (NYSE:GT), for example, experienced a slight decline in the number of units sold overall but was able to record quarterly revenues and profits, while Cooper Tire & Rubber (NYSE:CTB) saw a 16% sales rise on a 1% increase in unit shipments but found profits to be elusive -- it reported a $5 million loss compared with a $5 million profit last year.

Similarly, Japanese tire maker Bridgestone also had revenues grow 17%, but its net income fell below last year's effort -- $231 million versus $243 million. The last of the Big Four tire makers, Michelin, which is also the world's largest tire manufacturer, recorded a 7% gain in revenues, though it had a poor performance in the 2005 first quarter against which to compare and announced price increases that may have pushed up sales early.

The Rubber Manufacturers Association anticipates a meager 2% increase in sales for 2006, but the CEO of Cooper thinks that forecast may be optimistic. Yet with the replacement-tire segment of the industry composing 70% of sales and 75% of revenues in the $70 billion overall market, are there really many options available to customers? Moreover, with the number of vehicles on the road -- and the number of miles traveled -- on the rise, steady improvements in this key segment look promising.

All of this makes for some dicey decisions when deciding whether to invest -- let alone in whom to invest -- in this industry. I have placed a certain faith in Goodyear's ability to change its flats, but it still faces some significant risks: excessive debt, high pension costs, and the rising costs of raw materials, particularly oil, which is common to all of the tire manufacturers. Yet the others might make interesting plays as well.

Bridgestone, Michelin, and German tire maker Continental all have better credit ratings than either Goodyear or Cooper, and all three sport EBITDA margins nearly double those of the U.S. manufacturers. Of the five, Cooper appears to be the weakest, with its dwindling profits and margins, but because it has more money in the bank and access to credit, its financial picture does not appear to be as dire as say that of Goodyear and its long-term structural issues.

I find the industry to be an interesting one for investment. It's an old-line industry. It's not sexy, but considering the American love affair with the automobile, and the growth of cars overseas, there's plenty of demand for the product. All of the larger manufacturers are in the process of switching to more cost-efficient operations, including moving those operations to lower-cost countries. A number of niche players, including Bandag (NYSE:BDG) and Titan (NYSE:TWI), among others, make this industry not so much a bunch of retreads, but a field of exciting opportunities.

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Fool contributor Rich Duprey owns shares of Goodyear but holds none of the other stocks mentioned in this article. The Motley Fool has a disclosure policy.