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Auto Ancillary – No immediate revival

January 6, 2009

Auto ancillary industry is not excited over the fiscal stimulus package contending that there will not be any immediate relief from it. The industry feels that it will probably see any benefits of the package only after four to six months.

Indian government on January 2 unveiled second fiscal stimulus package in a month to boost the slowing economy. Banking regulator Reserve Bank of India also joined the move by cutting key policy and reserve rates. Analysts are saying that stimulus measures would force banks to lend more, however the benefits would be apparent only after April.

However, industry insiders believe that the move to increase depreciation on commercial vehicles purchased during the first quarter of 2009 does have a chance to push up sales and it will in a way help to prevent further down slide in this segment. Commercial vehicles sales declined by more than 50% in November and performance in December has been no better.

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