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Stocks in the automobile replacement parts industry are expected to perform above average in 1995 and out to 1997-1999. Industry growth is being fueled by improving economies worldwide, higher consumer spending power, and a surge in automobile manufacturing. Long-term growth could be enhanced by trade liberalizing pacts such as the North American Free Trade Agreement. Companies that recover and recycle coolants and refrigerants and that provide pollution-control devices should benefit from tougher environmental regulations that go into effect in 1995.

Automobile replacement parts industry stocks are expected to perform well both in 1994-1995 and out to 1997-1999. Economic recovery in the US and the anticipation of improvements under the North American Free Trade Agreement are fueling the growth. Though some investors have chosen to invest in other businesses to avoid the cyclical nature of the aftermarket, there are plenty of attractive investment possibilities. Potential investors should especially consider companies with foreign holdings.

Pricing is the biggest problem facing the automobile parts aftermarket, thanks to consolidation and pressure from the Big Three and distributors. Demand is low because of high automobile production levels. On the bright side, both NAFTA and an improved European economy should stimulate earnings growth through 1997 or 1999, making auto parts aftermarket stock a worthwhile investment.

Auto parts replacement industry stocks should be favorable investments overall for 1994. Despite economic improvements and rising car sales, consumers are expected to retain cars longer, increasing business for maintenance and repair service centers. Legislative changes such as the Clean Air Act could also work in favor of the industry and help sustain growth through 1997-1999. One adverse pressure on the industry is domestic automaker's demand for lower prices for original parts.

The stocks of replacement automobile parts companies should perform well in 1994, as the economy improves and as consumers commit more money to car maintenance. Statistics show that cars are remaining on the road longer, and are in need of more repairs. Environmental regulations will force many car owners to maintain their autos in accordance with federal standards. Most companies should continue the strong growth begun in 1993, and several stock issues should perform even better, offering above-average growth in the market.

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