Analyst Says New Vehicle Sales Could Rebound Soon

NEW YORK (AP) — New vehicle sales could start to recover in the next several months, which could give a needed boost to automotive stocks, an analyst said Tuesday.

KeyBanc's Brett D. Hoselton said retail financing trends appear to be improving, with loan approval rates rising in all credit quality levels, according to dealer reports and marketing data.

In addition, dealers have said that GMAC LLC, the financing arm of General Motors Corp., has been more aggressive lately. The company said earlier this month that it planed to increase lending and lowered its minimum credit score for applicants.

Hoselton also credited the government's Term Asset-Backed Securities Loan Facility, or TALF, program with thawing the automotive asset-backed securities market.

"Barring any material exogenous shock to the U.S. new and used vehicle market, improving retail automotive financing and automotive asset-backed securities issuance trends should ultimately result in an increase in new vehicle sales," Hoselton wrote in a note to investors.

Hoselton also said that the recent increase in used vehicle sales could foreshadow an upcoming jump in new vehicle demand.

The analyst backed his "Buy" ratings for Autoliv Inc., BorgWarner Inc. and Gentex Corp. He added that investors used to a high level of risk could also consider Tenneco Inc. and TRW Automotive Holdings Corp., but backed his "Hold" ratings for those stocks citing their uncertain outlooks.