Auto stocks get a nod on market

There may be gloom and doom in Detroit, but a few analysts on Wall Street think they can see better times ahead for the nation's two top auto companies, General Motors and Ford.

At least one of the analysts, David eisenberg of Sanford C. Bernstein & Co., holds that the auto industry is poised for a dramatic recovery. A second, David Healy of Drexel Burnham Lambert Inc., says he thinks the industry will see a "mild recovery." Mr. Healy last week recommended to his firm's clients that they start buying both GM and Ford, while Mr. Eisenberg, in keeping with his firm's policy, did not make any recommendations, but issued a positive research report.

Mr. Eisenberg, in a four-part study of the troubled auto industry, concludes:

* Passenger-car volume will stage a recovery from the depressed level of 1980 . The recovery will stem from the introduction of new models, which are far superior, technologically and functionally, especially in fuel economy, from current models. In fact, the analyst declares that the new products, combined with higher gasoline prices, will "render virtually the entire US car fleet obsolete."

* The demand for mid- to luxury-size cars will strengthen again, since GM and Ford will introduce new models with better gas mileage.

* General Motors will show the strongest recovery, and its share of the auto market will increase from a current 45 percent to 50 percent of the market in three years. The nation's second-largest corporation will also be albe to keep its profit margins intact and will show a peak earnings of $22 to $23 a share in 1983, up from what is expected to be $2.55 a share in today's depressed market.

* Although Ford will not turn the corner on its North American operations by 1983, its overseas operations will carry the company. In fact, Mr. Eisenberg says, "As incredible as it may seem, these [overseas] efforts will, in our view, position Ford to earn well over $30 per share in peak period, once even moderate profitability is restored to North American car and truck operations." This year Ford is expected to lost 80 cents a share.

* Chrysler Corporation's "sitution is virtually without hope," the analyst concludes. He says Chrysler's market share will begin to erode after it launches its version of GM's highly successful X-car. He says a merger or a joint venture with either a foreign auto company or Ford "seems inevitable." He estimates Chrysler will lose $12.50 a share this year.

Mr. Healy, for his part, reasons that the auto industry will enter 1981 recovering from the recession and gathering strength for a stronger 1982. He expects the chief stimulus to the industry will be the economy, which will be recovering from the recession and lower interest rates. Also, since the industry is in a stif cost-cutting push, margins wil remain high when the market turns around.

Although Mr. Eisenberg expects the companies to regain a share of the market from the importmakers, Mr. Healy believes this depends on the strength of the dollar against the yen and the availability of the types of cars the public wants to buy. Mr. Eisenberg estimates that by 1983-84 imports will constitute only 18 to 19 percent, compared with a current 25 to 26 percent.

Despite Mr. Eisenberg's and Mr. Healy's positive outlooks, the companies continue to report negative news. Car sales fell 27 percent last month, and GM cut its quarterly dividend to 60 cents a share, from $1.15, on May 5.

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