Auto shares climb in Asia but analysts offer cautious outlook

(MarketWatch) -- Automotive shares were among the bigger winners in the Asian markets Friday as traders bet on a continued recovery in global auto sales, but many analysts remained cautious about their outlook for the sector ahead of financial results from major Japanese carmakers.

"There was a marked difference in March auto sales growth in different countries, related to whether or not government support is in place," analysts at Goldman Sachs wrote in a note to clients Friday.

New vehicle sales growth was positive year-on-year in India, China, Germany and France, the analysts said.
In March, new car sales in China hit a record 1.1 million units, rising for the third-straight month and outpacing sales of new vehicles in the U.S.
However, sales "remained down substantially year-on-year in the U.S., Japan, Russia, the U.K. and Spain," the Goldman Sachs analysts said.

In late March, Japanese automakers reported sharp declines in domestic sales and exports for the month of February. See full story on Japan's car sales.
And in Western Europe, auto sales fell 8% on year in March, according to Goldman Sachs, although the decline was smaller than the fall of 17% in February.

"We think the stimulus packages are positive for automakers, lifting sluggish plant operating rates and keeping demand ticking over until an anticipated economic upturn" in the second half of 2009, the analysts said.
Still, they kept their "cautious" coverage view on the auto sector.

"Details of support measures in the U.S. are still unclear, and we are watching to see whether consumers put off purchasing vehicles in the near term," they said.


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