This article in Fortune magazine (link below) provides an encouraging look at the state of the US consumer. We draw your attention specifically to point number seven and the discussion of the auto sales rebound. The fact that the annual auto sales rate has been materially below the scrap rate provided the impetus for our initial assessment of the space, which ultimately led to our Auto Turnaround theme. Given that sales remain below scrap rates despite improvements in demand leads us to believe that the recovery is still in its early stages. Additionally we believe that regulations impacting emissions and fuel efficiency present meaningful opportunities for those suppliers which specialize in these areas. Add on the significant consolidation that has occurred in recent years and strong demand from emerging markets, and we believe that the auto supply industry has bright prospects ahead.
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