Barclays on U.S. Autos & Auto Parts: October SAAR Could Top 12mn Units

October 26, 2010 3:27 PM EDT
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Barclays on U.S. Autos & Auto Parts: October SAAR Could Top 12mn Units

Barclays analyst says, "The pace of light vehicle sales appears to have recovered further in October and could top the important psychological level of 12mn units, with a solid sequential increase in retail offset partially by lower fleet sales. Based on our channel checks, we estimate that the October 2010 SAAR (seasonally adjusted annual rate) could reach 12.1mn units, up nicely versus the 11.8mn unit pace from September, and well ahead of the 11.3mm rate achieved YTD."

"Very favorable SAAR factors explain in part the strength we expect this month, and should provide an even larger boost to November SAAR...In the near term, we expect investors to react positively to these high monthly headlines. However, the industry could see a payback in the December SAAR, which prompts us to retain for now our cautious 2011 sales and production forecasts of 12.0mn and 11.5mn units respectively."

"The strong recent rally in US auto stocks could keep going should there be upside surprises in October and November SAAR results."

Stocks of Note: Ford (NYSE: F), Daimler (NYSE: DAI), Toyota (NYSE: TM), Johnson Controls (NYSE: JCI), Magna (NYSE: MGA), American Axle (NYSE: AXL), Tesla (Nasdaq: TSLA), Sorl Auto (Nasdaq: SORL), Honda (NYSE: HMC), Tata (NYSE: TTM), Group 1 (NYSE: GPI), AutoNation (NYSE: AN), Lithia (NYSE: LAD), Penske (NYSE: PAG), CarMax (NYSE: KMX), Sonic Automotive (NYSE: SAH), BorgWarner (NYSE: BWA), TRW Automotive (NYSE: TRW), Lear (NYSE: LEA), Wabco (NYSE: WBC) and Federal Mogul (Nasdaq: FDML).

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