Delphi Automotive PLC (DLPH), Visteon Corp (C): Strong Supplier Earnings Suggest Booming Autos Growth

As earnings and revenue increase for suppliers, stability soars and sometimes even prices can fall. In a classic “everyone wins” scenario, we may very well see automakers reap the benefits later on this year. Here are two in particular that could post big second halves:

Toyota Motor Corporation (ADR) (NYSE:TM) boasts the top auto maker brand in world and more revenues than any of its competitors. If the global market expands, Toyota looks poised to seize the biggest piece of the pie. At current margins, a 4.3% uptick would mean an extra $10 billion in revenues and more than $1 billion in profit increases. Even after siphoning out operating expenses, the gains would boost net income over $400 million.

Ford Motor Company (NYSE:F)‘s relationships with the aforementioned suppliers could mean the company will be on the high end of booming auto growth. Although most of the suppliers sell to all of the major automakers, Ford has publicly recognized Visteon Corp (NYSE:VC), Tenneco Inc (NYSE:TEN), TRW Automotive Holdings Corp. (NYSE:TRW), and Autoliv Inc. (NYSE:ALV) as exceptional suppliers. The supplier with the strongest first quarter, Visteon, is a Ford spin-off that generates 25% of its revenue from Ford. YTD Auto sales have backed that up, as Ford’s market share slipped up from 15.6% to 16.2%. Like with Toyota Motor Corporation (ADR) (NYSE:TM), hitting 4% or more sales growth could easily mean huge profit boosts, including an extra $1 billion in profit.

Will Chavey owns shares of Ford. The Motley Fool recommends Autoliv. 

The article Strong Supplier Earnings Suggest Booming Autos Growth originally appeared on Fool.com.

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