Ahead Of The Bell: Autos

NEW YORK (AP) — A Wells Fargo analyst said Monday that while he expects automakers to post a steep drop in sales for September, auto suppliers could still post better-than-expected results for the third quarter.

In a note to investors, Richard Kwas backed his "Outperform" ratings for auto parts makers Johnson Controls Inc. and BorgWarner Inc.

"We believe the U.S. sales recovery will be gradual but gain more steam as 2010 progresses," Kwas said. "We like Johnson Controls headed into its analyst day (Oct. 13). The recent pullback in BorgWarner's shares provides good value for long-term investors, in our opinion."

BorgWarner shares have lost 11 percent of their value since Sept. 10.

Kwas said he expects a seasonally adjusted annual rate, or SAAR, of 9.8 million vehicles for September, down from 12.5 million in the same month last year. Last month, the SAAR was 14.1 million, largely as a result of a boost from the government's Cash for Clunkers program.

The analyst said he expects all three U.S.-based automakers to post sequential sales declines of at least 29 percent, with Ford Motor Co. the only automaker expected to post a slight year-over-year increase.