Merrill Lynch says Chrysler market share will be cut in half

In its latest “Car Wars” study, Merrill Lynch, Bank of America’s problem child, forecasts Chrysler will lose six points of market share over the next four years, leaving a company half the size it is today.

A five-point loss is predicted for GM, which analyst John Murphy sees giving up its top spot in the American light vehicle market to Ford.

The key to the study’s results is the lack of investment in new product, a factor Merrill Lynch blames on previous owners Daimler AG and Cerberus Capital Management. The Merrill analysts don’t see the new vehicles coming from Fiat as having much of an impact on Chrysler’s sales.

Chrysler disagrees, pointing out that it will have 24 new vehicles over the next four years. A company spokesman said the automaker has no plans to be “half our size in the future.”

Merrill defends its study, saying the past ten years of data show a strong correlation between steady product replacement and gains in market share. Based on its data, Chrysler will have only a 33 percent replacement rate compared to 68 percent for Toyota and 99 percent for Ford.