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BorgWarner's Pump Chains Bat for Silent Toyota Transmission

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BorgWarner Inc. (BWA - Free Report) supplies oil pump chains for Toyota’s (TM - Free Report) newly launched 8-speed automatic transmission. The company supplies 6.35 mm silent oil pump chain for usage in manufacturing new 2.5-liter Camry. Further, the new 8-speed automatic transmission will be used to serve the purpose of a transmission program, to be held next year.

Per Joel Wiegert, president and general manager, BorgWarner Morse Systems, the company is offering locally manufactured oil pump chains for Toyota in the United States. However, prior to this move, the company has already been an oil pump chain supplier for Toyota in Japan.

Good news is that BorgWarner’s continued global expansion has enabled it to start its own oil pump manufacturing facility in the United States.

BorgWarner Inc. Price and Consensus

The design of Toyota’s transmission includes an off-axis fluid pump assembly, along with a chain drive from the torque converter to the fluid pump. BorgWarner’s silent chain will offer a decreased level of noise and vibration in the transmission, thus leading to more efficiency.

BorgWarner is poised to benefit from expansion strategy. In Oct 2016, it commenced a plant construction in Rayong, Thailand to produce turbochargers for Asia-based global automakers. In fact, this will help meet the growing demand from Japanese automakers.

Price Performance

Shares of BorgWarner have gained 7.8% in the last three months, outperforming the industry’s 5.9% increase.

Zacks Rank & Key Picks

BorgWarner currently carries a Zacks Rank #3 (Hold).

A few better-ranked automobile stocks are Allison Transmission Holdings Inc. (ALSN - Free Report) and Volkswagen AG (VLKAY - Free Report) , both currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has a long-term growth rate of 11%.

Volkswagen has a long-term growth rate of 8.9%.

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