Ford Gets Lift From U.S. Auto Sales

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- The auto sector has had a challenging ride given the continuous economic crisis in the eurozone and slowing growth in the emerging markets.

However, the U.S. automotive market is showing strong signs of a recovery as sales volumes for the industry expanded by about 10% to 13 million units. Sales of Ford-brand vehicles, accounting for 96% of Ford's ( F) total sales in U.S., rose 17% for the year backed by the revival in demand in the automotive market.

For the year 2011, the company had a market share of 16.5%, second only to GM ( GM) with a market share of 19.2% and Toyota ( TM) a distant third position with 12.6% of market share.

We estimate a $15.70 price for Ford , which is about 20% higher than the market price.

See our full analysis for Ford here.

Ford expects to maintain its current market share of approximately 16.5% in the U.S., and considering the current competitive landscape in the automotive industry, the company will have to continue the product momentum with the introduction of some new models as well as the up-gradation of existing models. With persisting worries in the Europe's economy and with a sluggish recovery in the Asia Pacific and Africa region, the U.S. market could serve as an oasis for the company which is seeking growth ahead.

Currently North America market contributes about 47% of total vehicle sales for Ford, and with the expected launches of new Fusion and Lincoln MKZ, the company is definitely looking to solidify its position going forward.

The U.S. housing sector is yet to completely recover from the depths of recession and because of this slow pace of recovery, the inflation level for key commodities like steel, aluminum and iron is expected to be low to moderate in near term. With the relatively moderate level of inflation for key commodities, Ford is expected to improve upon its existing gross margin. Also, the rise in industry demand will further push revenue growth in mid-single digits in the near term.

After discontinuing the Mercury brand from its portfolio and sale of Volvo, the company is well set for consolidation and ready to focus on expanding its Ford and Lincoln brands across different geographies and is planning a capital investment in the range of $5.5 billion to $6 billion.

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