RPT-BAY STREET-Canadian car parts suppliers set for high gear

Mon Jan 28, 2013 7:14am EST
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* Fuel economy push, new features help drive demand

* U.S. auto sales up 13.5 pct in 2012, still seen rising

* Good entry point for Canadian supplier stocks: BMO analyst

By Susan Taylor

TORONTO, Jan 27 (Reuters) - All systems are go for Canada's auto parts sector. A gradual economic recovery, pent-up demand for new cars and a push for more fuel-efficient components portend strong growth for the country's biggest suppliers.

The fortunes of Magna International Inc, Linamar Corp and Martinrea International Inc are tightly tied to the Detroit Three and the health of the U.S. vehicle market. The outlook for both is reason for optimism.

Auto sales in the United States, still Canada's most important parts market despite boom times in China and South America, rose 13.5 percent in 2012 to nearly 14.5 million vehicles. This year, U.S. sales will reach 15.3 million vehicles, estimates Polk, a Southfield, Michigan-based research firm.

Polk cites low interest rates, a healthier housing sector and a wave of new vehicles introduced by major automakers as reasons for the growth. Consumers are eager to trade in their worn-out vehicles after delaying purchases during tough times.   Continued...