Fitch predicts recovery for auto suppliers

AP News
Posted: Nov 24, 2009 1:58 PM

Fitch Ratings is predicting a modest recovery for U.S. auto suppliers in 2010 as sales rise and the companies realize benefits from significant cost-cutting this year.

Fitch said Tuesday that some positive ratings actions could result in 2010. Fitch recently upgraded TRW Automotive Holdings Corp. and Tenneco Inc. But the agency said the overall credit profile of the sector remains below investment grade.

Fitch forecasts U.S. sales of 11.1 million vehicles in 2010, a 7.8 percent increase from this year's dismal results. That will mean higher production, which will help suppliers. Fitch adds that suppliers should also be helped by increasing auto sales in emerging markets like China, Russia and Brazil.

Fitch warned that the recovery will be tempered by weak economic conditions and lower vehicle sales in Europe. But it said suppliers have adequate liquidity after cutting costs this year.