DB's Auto & Auto Parts Industry Update

Deutsche Bank's Industry Alert for Autos & Auto Parts includes Ford Motor Company F and Lear Corporation LEA and is as follows: “Based on our mid-month channel checks, we estimate that the U.S. light vehicle SAAR is tracking at 11.6MM in September (+26.7% YOY on a unit sales basis); just slightly ahead of last month's 11.5MM SAAR. The low 9.2MM SAAR in September 2009 was driven by exhausted inventories, and sales "pulled forward" during the Cash for Clunkers program in August. Most auto makers are facing very easy comparisons this month, and will likely post strong year over year gains. Fundamentally it appears that there have not been many changes from last month in the industry. And it appears that the 3Q SAAR will be in-line with our forecast of 11.5MM; continuing the 200K-300K unit sequential qoq improvement that we expect will continue through 2011 (Q2 was 11.3 MM). For the month, we expect Ford / Chrysler YOY sales to be +40.0% / +45.0% and market share to be 16.0% / 9.5%. We expect Toyota / Honda / Nissan sales to be +24.0% / +23.0% / +21.0% and market share to be 16.6% / 10.1% / 7.1%. It appears that retail sales have continued to climb in September, and we believe that the retail SAAR will be 9.4MM just ahead of last month's 9.3MM. The retail / fleet split should remain flat with August at around 19% fleet. Despite fleet making up a smaller portion of the industry mix we expect Ford's market share to reach 16% again. The incentive environment for the industry remains fairly benign, and we expect this to continue based on low inventories, and other structural changes that have occurred in the North American market.” Ratings from Deutsche Bank are currently: Ford Motor $12.57 Hold, Price Target $14.50 Lear Corporation $75.12 Buy, Price Target $89.00 Click here to get trading ideas that could bring you a 100% return.