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Banc Of America Downgrades GM and Ford

Banc Of America downgrades General Motors (GM) and Ford (F) to sell from neutral.

Analyst Ronald Tadross says he's looking at the company's 3-year cost-of-ownership indicates GM continues to suffer about a 15% disadvantage, vs. major competitors. He thinks this could widen.

He thinks the current strategy of trying to raise prices exacerbates this, yet a strategy of reducing prices would hurt earnings further. He believes a turnaround plan would be difficult to execute and a bond rating downgrade would further pressure resale values.

Tadross doesn't think new truck volumes in 2006-2007 will be enough to offset challenges. He cuts his $3.50 2005 earnings per share estimate to $3.00 and his $32 target to $27.

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