U.S. auto parts suppliers should see greater sales growth than the 5-10 percent forecast for the Big Three for 1994, according to an industry analyst. Domestic vehicle sales will grow 10 percent as imports grow only 5 percent, said David Garrity, an analyst with McDonald & Co. Securities Inc.
``We will be seeing even greater opportunities for auto parts suppliers as a result of the rising number of transplants from the West and the economic advantage offered by the currency exchange rate,'' Garrity said.
On the tire front, the original equipment market will continue to grow much faster than the replacement market, he said. Garrity looks toward Goodyear to outperform companies like Cooper Tire & Rubber Co. because of Goodyear's strong OE/replacement market balance. Most tire makers, in the past, have focused on the replacement segment, he said.
Garrity also cited hose makers Gates Rubber Co. and Mark IV Industries Inc. subsidiary Dayco Products Inc. as major benefactors in the conversion from Freon to chlorofluorocarbon-free air conditioning systems.
Lower interest rates, expanded leasing options and an ever-aging vehicle fleet also will mean increased U.S. auto parts sales in 1994, according to industry observers.
More and more, U.S. new car sales involve leasing arrangements, Garrity said. Consumers who wouldn't normally be in the market for a new car have been drawn in by leasing, he said.
``We're finding an increased incidence of leasing in the small and medium passenger vehicle markets,'' he said. ``Traditionally only luxury cars offered the option. Now, companies like Ford are leasing up to 40 percent of certain lines, such as the Taurus.''
Much of the population also is in dire need of more dependable transportation, helping to boost sales, Garrity said. ``Approximately 32.3 percent of the vehicles on the road are 10 years old or older,'' he said. ``The average car is 8.1 years old-two years older than the average trade-in.''
The timing appears to be right for everyone but Japan, said Lehman Brothers Inc. analyst Jim Collins.
U.S. auto makers increased their home market share 1.5 percent in 1993, up to 75.3 percent, and can expect a 76.7-percent share by the close of 1994, Collins said.
``The whole pie is growing,'' he said. ``And, since the Japanese are not growing as fast, their slice is shrinking.''
The rising yen has cost Japan's 11 auto makers approximately $9.5 billion in profit-a loss nearly impossible to recover from, Mitsubishi Motors Corp. President Hirokazu Nakamura said in a year-end interview with Automotive News, sister publication of Rubber & Plastics News.
The exchange rate also translates into increased revenue for U.S. auto parts suppliers, according to Nissan Motor Co. President Yoshifumi Tsuji.
``It's true that American parts have been given a competitive advantage by the high appreciation of the yen,'' he told Automotive News. ``We increasingly find American parts that offer advantages over Japan-produced parts.''