new delhi in a needforthehour bid to boost the slowing auto sector finance minister p chidambaram in his interim budget announced a cut in excise duty for bikes small cars midsegment cars and suvs the government cut excise from 12 to 8 for small cars bikes etc excise duty on suvs were cut to 24 from 30 and for midsegment cars the same has been cut to 20 from 24 most analysts say the move will improve the automobile industry for sure provided it gets extended by the new government which come in till then it will be more of a short term call that will support the industry by supporting deamd it may be noted here that a similar cut in december 2008 had led to increased demand for auto stocks demand will be spurred up to some extent in the short term but from a medium to longterm point of view a 4 excise duty reduction is not going to have a big impact on the size of the market says sukumar rajah franklin templeton investment so we do not see that as a very material development from a longterm point of view he says earlier when the excise duty cut was announced almost all experts were positive on the sector but there may be some negative suprises there may in fact be some negative impact says prabhat awasthi head of equity research md india nomura financial advisories sec pvt ltd there will be some negative impact because the excise duty on the existing inventory has already been paid for he says awasthi is of the view that the fact is that while you will get relief from volumes you might get some hit on account of excise duty reductions that have happened on the inventory which is already with the dealers usually auto companies tend to run on volumes so if the volumes pick up considerably there could be a movement in the stock prices which is upwards he concludes et online published on feb 20 2014 at 0602 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 stock excise duty homenewsauto financeauto stocks may not ride the excise duty cut euphoria for long