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By Anil Nain

The average age of passenger cars on the road in the U.S. today is about 11 years and increasing quickly, according to auto research firm R.L Polk and Co. Combine this with an improving economy and some pent-up demand, and you have a perfect recipe for accelerating new vehicle sales.

And that may be what we are beginning to see. According to NADA, the U.S. auto industry sold 1.2 million light vehicles in February, up 14.3% from January and up 3.7% from February a year ago. New vehicle sales are running at their strongest pace since 2007, and are expected to strengthen over the next year or two; Edmunds.com projects a 4% increase over 2012 total new car sales, to 15 million units. Put into context, U.S. total auto sales averaged 16 million units annually between 1994 and 2008, falling to 4.6 million units in 2009 - the nadir of the auto industry crisis - with total U.S. motor-vehicle sector sales in 2011 that were 48.1% below 2000 levels.

This recent strength in sales is causing the industry to suffer some unusual growing pains. Unlike the auto business we knew over the last 20 years, there is relatively little if any slack in the system. The U.S. automotive industry that was characterized as 'well over capacitized' by most armchair analysts is now in many places 'capacity constrained.'

Perhaps nowhere is this more true than at the original equipment parts manufacturing level. The downturn in new vehicle sales driven by the recession made significant downsizing a survival requirement at most parts and component manufacturers.

Some component manufacturers will thrive in a new up market, others will falter. So, while the resurgence of new auto sales is hardly a fait accompli, here are some names whose stars are hitched to the OEMs.

BorgWarner (BWA) makes power-train products, including transfer cases, for some of the world's major automakers. The company's largest customers are Volkswagen and Ford, and about three-quarters of the company's sales are derived from OEMs. While the company sprawls over 17 countries and 64 locations, it currently faces considerable headwinds-including technological competition-from the likes of Bosch, Denso, Honeywell and Magna, not to mention pressure to control costs.

Regarding the latter, raw material price gains are typically unable to be passed along to the company's OEM customers, so this is important to take note of. Some analysts think this stock has more sustainable growth than many of its peers, and it's an interesting question to consider (see the details here).

Johnson Controls, Inc. (JCI), meanwhile, makes car interiors, batteries and other control equipment. In their automotive segment-which generated just under half of their total revenue in 2012-two-thirds of the business is in seating; the other third is in interiors and electronics. The company's power solutions segment brings in about 15% of sales, of which one-fourth are from OEMs, and three-fourths from the "aftermarket." The company has recently been adding capacity and innovating; at the North American Auto Show in January, the company unveiled its 48-volt micro hybrid battery technology. "Micro hybrid technology has the potential to deliver the next level of fuel efficiency along the spectrum of vehicle performance, reaching upward of 15% to 20% in fuel economy," according to Alex Molinaroli, president of the company's power solutions.

Magna International (MGA) makes automotive systems, assemblies, modules and components and builds complete vehicles for sales to OEMs. Over 80% of the company's sales come from BMW, Chrysler, Daimler (OTCPK:DDAIF), Ford (F), General Motors (GM) and Volkswagen (OTCQX:VLKAY). Magna expects a net increase in total production sales from 2012 to 2014 of approximately $3.2 billion.

American Axle and Manufacturing Holdings, (AXL) makes driveline systems, modules and parts for the light vehicle market including SUVs, light trucks and passenger cars and commands just under 40% of market share in the US drive shaft market. The company customers include GM, Chrysler, Paccar (PCAR), Volvo (OTCPK:VOLVY) and Ford, with the U.S. market accounting for about 90% of the company's sales.

Dana Holdings (DAN) makes axles drive shafts and service parts for just about every major vehicle and engine OEM in the global automotive, commercial vehicle and off-highway markets. In 2012, North American markets contributed 43% to revenue, 25% came from Europe, 20% from Asia and 12% from South America, and 45% of aggregate sales came by way of light vehicles. Despite weakened demand in the second half, the company recorded free cash flow of $325 million in full-year 2012, up from $174 million in 2011.

Whether or not the industry will revert to some normal remains to be seen, but in the meantime, pricing pressure from OEMs, rising raw material costs and increased competition from international manufacturers continue to present strong headwinds to auto parts suppliers. Like all investment strategies with market-beating potential, it's important to remain up-to-date on these companies.

Source: 5 Stocks Positioned To Ride An Auto Sales Wave