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Dealership chain AutoNation and parts supplier BorgWarner see better results, despite recalls, bankruptcies and slow sales.

Domestic and foreign car companies are still sorting through plenty of pain, whether from bankruptcy, recalls or just the lingering impact of the worst year for sales in recent memory, but some of their compatriots in the automotive industry offered a more upbeat look at the environment Thursday.

Dealership chain AutoNation ( AN - news - people )and parts supplier BorgWarner ( BWA - news - people ) each posted better-than-expected results for the fourth quarter of 2009.

Early Thursday Fort Lauderdale, Fla.-based , which owns nearly 250 new-vehicle dealership franchises in 15 states, said revenues increased in most of its business segments, offsetting weakness in sales of parts and services, backing up the company's sentiment that the auto sector is slowly beginning to recover. Fourth-quarter profits at AutoNation were down 8% at $61.7 million, or 35 cents per share, but the decline was attributed to a hefty tax benefit booked in the fourth quarter a year ago.

Meanwhile, auto parts supplier said strengthened demand for turbochargers and other car parts helped it post a profit of $52.7 million, or 45 cents per share, compared with a year-earlier loss of $81.4 million, or 70 cents per share. Auburn Hills, Mich.-based BorgWarner focuses on fuel- and performance-efficient auto parts, a growing area of the auto industry. Like AutoNation, BorgWarner's greatly improved results point to an industry recovery in the last three months of 2009, which could extend into 2010.

"Strong sales growth combined with our lean cost structure drove fourth quarter results," said BorgWarner Chief Executive Timothy M. Manganello. BorgWarner expects sales to grow 15% to 19% this year, with full-year earnings in the range of $1.40 per share to $1.70 per share. The auto parts supplier said business is growing rapidly in Asia, but the outlook in Europe is less certain. "We are optimistic about 2010, but also cautious as we contemplate the range of possible outcomes around the world," Manganello said.

Citi ( C - news - people ) Investment Research analyst Itay Michaeli said last month that auto suppliers that furnish parts to Toyota ( TM - news - people ) could lose some business during the automaker's recalls but might be able to make up for it if demand from rival automakers ramps up. Borg Warner generates about 5% of its annual revenue from Toyota, Michaeli said.

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