Auto supplier ArvinMeritor Inc. expects third-quarter sales to increase 20 percent from a year earlier to $2 billion despite weaker than anticipated sales in North America.

Stronger demand in South America and Asia will offset about a 5 percent drop in ArvinMeritor's forecast for industrywide light-vehicle sales in North America. The company said it will continue plans to spin off its light-vehicle business unit into a stand-alone company, Arvin Innovation Inc.

ArvinMeritor now expects North America vehicle sales of about 14.5 million, down from its earlier estimate of 15.2 million.

"Our strategy to refocus, restructure and regenerate the business continues to show results," CEO Chip McClure said in a statement. "Our balanced geographical footprint and product mix is offsetting the weak market we're experiencing in North America."

ArvinMeritor has relied on overseas sales growth as its North American sales shrink. North America accounted for about 35 percent of total sales in 2007, down from 50 percent in 2005. Less than 20 percent of its light-vehicle sales are to the Detroit 3.

"In spite of the volume decline in Europe and continued depressed sales and production forecasts in North America, our team has worked diligently to make operational improvements across the business," McClure said.

ArvinMeritor, of suburban Detroit, makes brakes, axles, drivelines, wheels, sunroofs and other products. The supplier ranks No. 15 on the Automotive News list of the top 150 suppliers to North America, with original-equipment automotive parts sales of $3.01 billion in 2007.