Market capitalisation of ancillary firms shrinks with auto sector slowdown

A slowdown in the automobile sector is having a cascading effect on component makers, with large listed ancillary firms witnessing their market capitalisation shrink on account of reduced orders, piled-up inventories, and an uncertain future.

The current slowdown, which is a combination of complex regulations that go into effect next year, heightened competition across segments, and less-than-optimum consumer sentiment, has been the most protracted in a decade, and side- effects are being felt even by dealers who distribute vehicles to the end consumer.

Even minor changes in regulations and law have had knock-on effects, hurting sales. For example, the new