we believe investors should take note of the cautious sales outlooks of global oems said hitesh goel mumbai maruti suzukis poor show for the december quarter has had a ripple effect and has hit the auto ancillaries sector hard as shares of such companies have corrected by up to 15 since the carmaker announced its results last fridaymaruti suzuki reported 30 ebitda miss on consensus for the december quarter with margins plummeting 470 bps quarteronquarter to 96 due to weak demand and cost pressureimpact of fall on the original equipment manufacturers oems margins will also be visible on the margins of auto ancillary players especially when you supply to the market leader who holds half the market said bharat gianani research analyst sharekhan we expect auto ancillary players margins to be impacted as oems would typically negotiate hard with vendors for passing cost increases and would not fully allocate the cost hikes advt motherson sumi lumax bosch and minda industries are some of the major auto component suppliers to maruti and operating profit margins of several auto component companies such as motherson sumi schaeffler india wheels india jamna auto gabriel india and lumax industries have already declined on both quarteronquarter and yearonyear basis in the september quarter stocks of motherson sumi varroc engineering sundaram clayton jamna auto lumax have plunged more than 40 from their 52week highscrisil expects the automotive component sectors revenues to grow at 10 between fiscals 2018 and 2020 compared with 115 in preceding two fiscalswe recently downgraded auto ancillary players such as motherson sumi bharat forge ramkrishna forgings and are maintaining a cautious stance on ancillary players like subros minda industries given the likely pressure on margins due to volume slowdown said bharat gianani of sharekhannot only maruti global oem players such as daimler hyundai and vw group which contributed 60 to motherson sumis revenues in fy2018 have reported just 12 volume growth for the past two quarters and their revenues have been decliningwe believe investors should take note of the cautious sales outlooks of global oems said hitesh goel analyst kotak securities vw group has already highlighted that calendar year 2019 would be a difficult year for the group as economic growth is likely to decline in the us and china in cy2019 over cy2018 by rajesh mascarenhas et bureau published on jan 29 2019 at 0844 pm ist telegram facebook copy link be the first one to comment comment now comments comment now read comment 1 all comments post post find this comment offensive choose your reason below and click on the submit button this will alert our moderators to take actions reasons for reporting foul language defamatory inciting hatred against a certain community out of context spam others report join the community of 2m industry professionals subscribe to our newsletter to get latest insights analysis download etauto app get realtime updates save your favourite articles scan to download app auto ancillary maruti suzuki india ltd daimler ag hyundai bharat forge