As per the recent notification by the director general of supplies and disposals, the government has decided to issue Maruti Esteem model this year in place of Ambassador cars to its senior officials and bureaucrats. Around 33,000 cars used by officials retire every year and there is also a high demand for additional cars. The order may help Maruti increase its declining market share and in turn help many auto ancilliary manufacturers come out of the blues. Stock markets have been hammering many auto ancilliaries thanks to the falling demand, rise in petrol prices and stiff competition.

In fact, a number of these stocks are trading near their 52-week lows. However, stocks like Motherson Sumi Systems, Amtek Auto, Talbros Auto, Banco India and Clutch Auto are witnessing spurt in prices. Motherson Sumi Systems and Amtek Auto have hit their 52-week high on the Bombay Stock Exchange on November 14. While the former was quoting at Rs 151, the latter closed at Rs 189.95. The sharp uptrend has also been due to other developments like expectations of increase in stake by foreign partner.

Commenting on the future of the Indian auto-ancilliary industry, Mr Vijay Bhushan, another Delhi-based broker, opines that the foreign collaborations of these companies will hold them in good stead. ``The companies have been successful in getting OEM status and export orders due to their joint ventures with Japanese and Korean companies.''

The foreign colaborations have helped them produce auto-parts of international standards. According to Mr Bhushan, ``The companies which get OEM status from different auto manufacturers will be able to spread risks and withstand competition. Export market and the resale markets also hold a lot of opprotunities for these companies.'' But Mr Bhushan is not bullish on the Indian auto industry. According to him, ``Rising fuel prices and fierce competition will have a dampening effect on this sector''.