Friday, August 10, 2012

CONTINUE STIMULUS

THE MOVE WILL SURELY BOOST THE INDUSTRY DEMAND

The biggest point of worry for the automotive industry from the budget is the withdrawal of the stimulus package that was offered by the Government in the time of the slowdown last year. We believe that if the Government continues with the package it will be a very positive sign for the growing demand in the industry. But if it really wants to withdraw the stimulus then it should phase it out gradually so that the impact is not severe.

We are very much sure that whatever decision they take will keep in mind the interest of the automakers. However, even if the Government withdraws the stimulus in a single go, we will welcome it with open arms. Further, the recommendations of the Kirit Parikh’s report are nothing more than a report so far. There is no denying that Rs.80,000 per car as duty will be a lot for the Indian small car industry but we will have to wait and watch how the Government reacts to it.

Whatever be the case, with the start of April we will be withdrawing Maruti 800 from 13 cities where BS-IV norms will be applicable as at Maruti, we believe that it doesn’t makes a lot of sense to make it a BS-IV compatible. The withdrawal of Maruti 800 is a painful decision as it has been associated with the company for a long time and has played a role of one of the major driving forces for the company since the time of its inception. But there isn’t much we can do about it.


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