Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Automobile
The automotive sector, which has emerged stronger post the 2008 recession, continued its growth momentum in
the current fiscal (YTD FY2011) with ~30% growth in volumes. Noticeably, concerns related to the slowdown in the
sector due to increased excise duty in the 2010-2011 budget were proved wrong as demand remained robust.
However, with near-term headwinds in the form of higher raw-material prices, increasing fuel costs and rising
interest rates, Society of Indian Automobile Manufacturers (SIAM) has urged the government to retain excise duty at
the existing levels. We expect the status quo on excise duty to be maintained on small cars, two-wheelers and
commercial vehicles. However, we expect rates on large cars and utility vehicles to be raised on account of
concerns raised by the environment ministry.
Further, the sector stands to benefit from indirect sops such as higher outlay for the rural sector (driving expected
consumer spending) and increased budgetary allocation for infrastructure spending (leading to increased road
freight).
Overall, we expect the Union Budget 2011-12 to be Neutral for the automobile sector.
Budget Expectations
Head Item Current Status Expected Change Potential Impact
Excise Duty Small cars, two- Ch d N h
wheelers, commercial
vehicles
Charged at 10% No change
Large cars and utility Charged at 22% Excise duty hike of 2-4% Negative for Mahindra & Mahindra
vehicles and Tata Motors. Price hike to be
passed on to end-consumers
Top Picks
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Automobile
The automotive sector, which has emerged stronger post the 2008 recession, continued its growth momentum in
the current fiscal (YTD FY2011) with ~30% growth in volumes. Noticeably, concerns related to the slowdown in the
sector due to increased excise duty in the 2010-2011 budget were proved wrong as demand remained robust.
However, with near-term headwinds in the form of higher raw-material prices, increasing fuel costs and rising
interest rates, Society of Indian Automobile Manufacturers (SIAM) has urged the government to retain excise duty at
the existing levels. We expect the status quo on excise duty to be maintained on small cars, two-wheelers and
commercial vehicles. However, we expect rates on large cars and utility vehicles to be raised on account of
concerns raised by the environment ministry.
Further, the sector stands to benefit from indirect sops such as higher outlay for the rural sector (driving expected
consumer spending) and increased budgetary allocation for infrastructure spending (leading to increased road
freight).
Overall, we expect the Union Budget 2011-12 to be Neutral for the automobile sector.
Budget Expectations
Head Item Current Status Expected Change Potential Impact
Excise Duty Small cars, two- Ch d N h
wheelers, commercial
vehicles
Charged at 10% No change
Large cars and utility Charged at 22% Excise duty hike of 2-4% Negative for Mahindra & Mahindra
vehicles and Tata Motors. Price hike to be
passed on to end-consumers
Top Picks
- Bajaj Auto
- Maruti Suzuki
- M&M
- Tata Motors
No comments:
Post a Comment