TORONTO (Reuters) - Beaten down shares of Canadian auto parts makers may offer outsized rewards for those with a long time horizon, but investors would be wise to wait to see what the future holds for the big US automakers.

Analysts said balance sheets are key and noted firms have stockpiled cash in anticipation of an extended downturn. Major players in the Canadian industry include Magna International Inc., Martinrea International Inc. and Linamar Corp.

But the outlook is far from clear if key customers General Motors Corp. and Chrysler are forced to file for bankruptcy protection.

"The consequences of these bankruptcy filings is unknown, or, the risk is high, so I would say I would stay out for now, given the risk reward ratio, until you have more clarity on the GM, Chrysler side," said Youssef Abboud, an autos analyst at Clarus Securities.

With the North American economy in the grip of a fierce slide and auto sales plunging, no Canadian auto parts maker has seen its share price spared.

Industry giant Magna ended Friday's session on the Toronto Stock Exchange down 56 percent from the beginning of last year. Martinrea's shares have fallen 76 percent since the start of 2007, while Linamar has dropped 86 percent.

Both earnings and production at most parts companies are expected to continue to suffer over the next couple of years due to the brutal downturn in the auto sector.

In February, US auto sales plunged 41 percent compared with a year earlier. It was the 16th consecutive monthly drop and it put sales at their lowest level in almost three decades.

If a company is going to survive, the main factor is going to be a strong balance sheet, analysts said.

"That means they don't have a lot of debt to refinance, and they don't have a lot of interest expenses to cover," said Kam Hon, an auto analyst at Dominion Bond Rating Service.

"Those that can survive the lean times for 12 months or 18 months, there will be a lot of upside, because they make parts that are needed."