Ford seen gaining U.S. market share: Merrill study

DETROIT (Reuters) - Ford Motor Co is expected to gain U.S. market share in the next few years and rivals General Motors Co and Chrysler may see sharp declines, a Merrill Lynch report released on Wednesday has found.

The annual "Car Wars" study from Merrill Lynch found that Ford's market share could surpass GM and based on the share gains Ford could post better than break-even earnings per share in 2010 and possibly $1 per share for the year in 2011.

Ford's U.S. market share could rise 3 percentage points over the next four years to about 18 percent, while a realistic GM market share would be closer to 15 percent or 16 percent, the study found.

Ford, whose shares rose 3.6 percent on Wednesday, is the only U.S. automaker not to go through bankruptcy. GM emerged last week as a much smaller automaker and Chrysler was acquired by a group led by Italy's Fiat SpA in June.

GM aims to focus on its Chevrolet, Cadillac, Buick and GMC brands, trimming several other brands from its lineup.

"We continue to believe Ford is effectively executing on its restructuring plan, while bolstering liquidity, and view the results of our Car Wars study as further evidence that management is making all of the right moves," Merrill Lynch analyst John Murphy said in a separate note to clients on Wednesday.

Merrill Lynch, which raised its price objective on Ford stock to $8.75 from $7.50, gave a much less rosy outlook for GM and Chrysler in the study, predicting a 5 percentage point drop in GM market share over four years and a 6 percentage point drop at Chrysler that would leave it half its current size.

With U.S. annual industry auto sales at about 14 million units, far higher than the 10 million sales expected in 2009, GM's market share losses would equate to 500,000 vehicles or about two fewer assembly plants, the study found.

"Chrysler's product pipeline is dubious and likely to drive significant market share losses," the study said.

Chrysler plans to introduce Fiat-designed small cars into the U.S. market starting in about 18 months.

Merrill Lynch also said it sees Korean automakers Hyundai Motor Co and Kia Motors gaining significant market share, about 3.5 percentage points, over the next four years, and Honda Motor Co Ltd gaining 3 percentage points.

(Reporting by David Bailey, editing by Leslie Gevirtz)