The "60" in a tire measurement of 195/60 isn't diameter, it's "aspect ratio". If you take the width of the tire (195mm) times 60%, you'll end up with the sidewall height in mm. So, to figure the overall circumference of a tire, it's
circumference = (diameter of wheel + 2 * sidewall height) * pi
The diameter of the tire is the diameter of the wheel plus 2 times the sidewall height. In your case, you have a 14" wheel. Let's convert that to 355.6 mm so that all of the untis are the same. Your sidewall height is 185mm * .65, or 120.25mm. So, the overall circumference of your stock tire size (185/65) is
c = ( 355.6mm + ( 2 * 120.25mm ) ) * pi = 1872.70mm
To calculate the overall circumference for the 195/60 tire:
Sidewall height = 195mm * .60 = 117mm
c = ( 355.6mm + ( 2 * 117mm ) ) * pi = 1852.28mm
Because the sidewall is measured as a fraction of the tread width, a wider tire (195mm > 185mm) with a smaller aspect ratio (60% < 65%) can have almost the same overall circumference. In the case of the two sizes we're talking about here, it's about a 1% difference in the speedo reading.
If you change from a 65 to a 60 aspect ratio while leaving the tire width the same, you reduce the sidewall height, which increases your fender gap. It's not much of a difference in this case, though; about a 1/4" difference in the diameter of the tire.
Check out
http://www.miata.net/garage/tirecalc.html for a nifty size calculator that will let you compare two tire sizes to see what the difference in diamater and speedo error will be.
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