Private equity firm Carlyle Group is looking to sell auto parts supplier Metaldyne and hopes to fetch as much as $1 billion as it cashes in on a strong recovery in vehicle production volumes, according to people familiar with the matter.

The potential sale of Metaldyne could prove a strong win for Carlyle almost three years after the U.S. auto supplier filed for Chapter 11 bankruptcy protection as it struggled with high debt and a severe slump in vehicle production volumes in North America.

Carlyle, which led an investment group that acquired Metaldyne assets out of bankruptcy in late 2009, has chosen Bank of America Merrill Lynch to advise on a possible sale of Metaldyne after interviewing investment banks in February, according to the sources.

The Plymouth, Michigan-based supplier is projected to have about $150 million to $160 million in earnings before interest, tax, depreciation and amortization (EBITDA) in 2012, and could be sold for about 6 times EBITDA, they said.

(Reporting by Greg Roumeliotis and Soyoung Kim in New York; Editing by Gary Hill)