Outlook for the AUTO Sector

Auto sales continued to grow on a fast track in June 2010 on the back of positive consumer sentiment and buoyant economic activity. Tata Motors, Bajaj Auto and TVS Motors continued to perform impressively, recording strong monthly sales during the month. Robust growth across the segment continued with demand surpassing supply in few segments with vendors' capacity being stretched out. This is despite the fact that most auto majors increased their prices, passing on the cost impact to consumers, owing to high commodity prices, changes in emission norms and excise duty hike. Pickup in economic activity kept auto demand strong, albeit it remained more normalised across segments, considering price hikes post the excise duty hike, change in emission norms and spurt in raw material prices.