The good times roll for auto suppliers

Major auto suppliers blew past profit expectations on Friday, suggesting the recovery in the global auto market remains strong despite rising oil prices and the disaster in Japan.

Goodyear Tire & Rubber Co., power-train maker American Axle and Manufacturing Holding Inc. and Lear Corp., which makes seating and electrical power management systems, posted first-quarter earnings that easily exceeded Wall Street estimates on improving global demand.

“The recovery in the auto industry is gaining momentum,” said Tim Ghriskey, chief investment officer with Solaris Asset Management. “Clearly, the sales are doing well and the consumer is replacing older vehicles.”

Lear cited a 5 percent increase in global auto production in the first quarter compared with a year earlier. Demand grew around the world, offsetting a 32 percent production decline in Japan due to the earthquake and tsunami.

The earnings reports released Friday highlighted a strong week for the auto industry, underlined by Ford Motor Co.’s better-than-expected profit.

“Obviously, it’s all about volume,” Morningstar analyst David Whiston said. “With a lower fixed cost and a better top line, it’s not a surprise to see earnings doing so well.”

David Silver, analyst with Wall Street Strategies, cautioned against exuberant expectations, however.

“The profitability of the North American automakers is much improved from 2007 and 2008, but the Japan disaster is an overhang.”