Drop in Asian auto majors drives Indian auto futures into discount

MUMBAI: Indian automobile stocks fell on Wednesday following a drop in Asia's biggest automobile manufacturers Toyota and Honda Motors. At 12:39 pm, the BSE Auto Index was down 1.67 per cent at 2422.

Top losers from the sector were Tata Motors (-5.75%), Escorts (-4.07%), Bajaj Auto (-2.86%), Ashok Leyland (-2.49%) and Maruti Suzuki (-1.94%).

In futures, Maruti Suzuki December futures was at a discount of Rs 2, Tata Motors and Ashok Leyland December futures were at discount of Rs 1 while Bajaj Auto and Escort futures were trading flat to spot.

Toyota Motor, the world's second-largest automaker, dropped 3.8 percent in Tokyo after forecasting its first operating loss in 71 years and cutting global production. Honda Motor, Japan's second-largest automaker, fell 5.9 percent. Production dropped 10 percent to 326,176 vehicles, the company said separately today.

Bridgestone Corp., the world's largest tire maker by sales, and Denso Corp. dropped more than 3 percent after slashing their earnings estimates. Ssangyong Motor, the South Korean unit of China's largest carmaker, fell 8.9 percent.

Back home, there is about 2.5-3 months inventory piled up in the entire automobile system. Tata Motors��� Jamshedpur plant has only worked for 10 days in the current month. Maruti Suzuki said it may consider production cut if the market does not improve.

The company, which has been negotiating contract manufacturing deal for its A-Star model with Nissan, also expects to start exports for the Japanese car maker by around February-March next year.

Maruti Suzuki India Managing Director Shinzo Nakanishi said that across the world there has been a slowdown in demand, including China, India and other BRIC countries. In the April-November period, the company's sales growth witnessed a negative growth of 3 per cent compared with the corresponding period last year.