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Ahead of the Bell: Auto retailers

NEW YORK (AP) -- An analyst said Wednesday that he is still upbeat about automotive retailers thanks to July sales of light vehicles in the U.S.

Brett Hoselton of KeyBanc Capital Markets said in a client note that the seasonally adjusted annual rate of sale for light vehicles in the U.S. came in at 14.1 million units last month, basically in line with expectations. The analyst said he was happy to see that strong retail sales offset some weakness in fleet sales.

Hoselton anticipates that the performances of Asbury Automotive Group Inc., AutoNation Inc. and Group 1 Automotive Inc. will likely be helped by the mix of automotive brands that they offer.

The analyst says that the auto financing environment continues to get better and the availability of sub-prime loans continues to loosen, which should help overall auto sales and Chrysler in particular since they look favorably on sub-prime borrowers. And Hoselton said that could help Lithia Motors Inc., given that about 30 percent of its new vehicle sales are from Chrysler.

The analyst has a "Buy" rating for Lithia Motors and downgraded Group 1 Automotive to "Hold" from "Buy," saying the stock is fairly valued right now.