Morgan Stanley cuts 2012 U.S. auto sales, earnings estimates

DETROIT (Reuters) - Morgan Stanley lowered its 2012 U.S. auto sales projections by about 3 percent and cut its earnings-per-share estimates for the North American auto sector due to weaker-than-expected sales in the United States and Europe.

The firm now expects U.S. auto sales to be 14.4 million this year, down from its earlier projection of 14.8 million.

The rate of U.S. auto sales in the second quarter fell short of analysts' estimates, Morgan Stanley said in a research note on Monday. The annualized sales rate fell to 14.1 million in the second quarter, down from 14.5 million in the first three months of the year.

The disappointing performance coupled with falling sales and vehicle prices Europe "cast a shadow" on financial results during second half of 2012, the firm said.

The depreciation of the U.S. dollar against the euro and a slowdown in sales in key emerging markets like China will also hurt results.

Morgan Stanley cut its earnings-per-share forecast for nearly all the North American auto companies it covers.

The firm cut its earnings-per-share outlook for the largest U.S. automaker General Motors Co (GM.N) by more than 10 percent to $3.40 per share. On average, Wall Street analysts expect GM to earn $3.25 per share, according to Thomson Reuters I/B/E/S.

In Europe, confidence is down among consumers who are looking to lower their debt by skipping big-ticket purchases like new automobiles, Morgan Stanley said.

Morgan Stanley cut its 2012 forecast for European light vehicle sales last week to down 7 percent from down 6 percent.

Last week, GM's European unit Opel got its fourth CEO in less than three years and France's PSA Peugeot Citroen (PEUP.PA) announced 8,000 job cuts and a plant closure.<ID: nL2E8IC8VT>

Ford Motor Co (F.N) also recently warned that its outlook in Europe was deteriorating. Morgan Stanley estimates that Ford will lose $1.1 billion in Europe this year.

Morgan Stanley now estimates Ford's annual earnings per share at $1.26, down 3.1 percent from its previous forecast of $1.30.

U.S. auto sales were 12.8 million in 2011.

(Reporting by Deepa Seetharaman; Editing by Bob Burgdorfer)