China's Auto sector may outperform India's in 2009

The China's automobile sector is doing more than that of India as Tata motors, Hyundai and Maruti, biggest player of the indian auto sector, are facing loss in profit of Q3 . Merrill Lynch in its report on Asia's auto sector has said that the country's recent state-sponsored measures to boost demand is expected to benefit its sector there.

Due to a weak economy and lack of financing sector, there is a demand for automobilers in India. Merrill also said in a report that Slowing economic activity, resulting in demand capitulation from key user segments such as construction and mining will likely worsen sales trends.

A growth in sales of durables such as cars and two wheelers to remain muted in the low single digits. Probably till the first half of 2009-10, earnings of the auto industry here are likely to remain negative as per the investment bank.

Because of lower competition in Auto Industry, he two-wheeler segment may perform slightly better than the other segments. Despite the falling profits, most of the segments would trade t the middle or low end of the historical average. At the same time, relative underperformance to be restricted.

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