Canada's car part makers ride road to recovery

Sun Jun 24, 2012 11:54am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Susan Taylor

TORONTO (Reuters) - Canada's big auto parts suppliers are on the road to recovery as pent-up demand powers growing sales of new vehicles in North America, a trend expected to gather speed gradually through the remainder of the decade.

Still, challenges linger for the companies that make everything from car seats to chassis, and analysts say they must look beyond rebounding domestic markets if they are to continue to grow.

"What's really going to be key is how they are positioned in the emerging markets, because that's where the growth is going to come from," Scotiabank economist Carlos Gomes said.

Setting strategy to tap new markets is a turnaround from the grim conditions of 2009, when an auto industry on the verge of collapse was salvaged by multibillion-dollar bailouts by Canadian and U.S. taxpayers.

Back then, General Motors Co and Chrysler looked like they were headed for the scrap heap, with the potential to take suppliers with them.

But the industry pulled back from the brink, staging a slow-but-steady comeback that has helped lift Canada's biggest listed parts suppliers: Magna International Inc, Linamar Corp and Martinrea International Inc.

Magna shares have more than tripled in value from the dog days of early 2009, but remain about 15 percent below prices in the robust period of late 2007.

Likewise, Linamar stock has roared back from a C$2 low point in early 2009 to C$20.37 on Friday, but still lags an October 2007 price of C$26.48.   Continued...

Linamar Corporation Chairman Frank Hasenfratz hands over the podium to Chief Executive Officer Linda Hasenfratz (L) during the annual general meeting of shareholders in Guelph May 11, 2010. REUTERS/ Mike Cassese