The automobile industry in India is one of the largest and fastest-growing sectors, playing a crucial role in the country’s economy. India is the fourth-largest automobile market globally, with a strong presence in both passenger and commercial vehicles. The sector is driven by a growing middle class, increasing urbanization, and rising disposable incomes.
A report by Tata Mutual Fund stated that India exports nearly $6.8 billion worth of automobiles and auto components to US, and the tariff is likely to impact the price competitiveness of these companies as well as their suppliers.
Reason for the Fall
The fall in auto stocks is mainly due to the 25 percent tariff imposed by the U.S. on imported cars and auto parts. This tariff increases costs for Indian auto exporters, affecting their price competitiveness. The trade tensions are expected to reduce demand in the U.S. market, further squeezing margins. Companies with significant U.S. exposure are particularly impacted.
Nifty Auto Index
The Nifty Auto Index is currently trading at Rs. 20,580.60 and is down nearly 3 percent compared to the previous close of Rs. 21,164. The proposed tariffs by the US could have a concerning ripple effect on the Indian auto industry, particularly because the US is one of the biggest markets for Indian exports.
Brokers View
Arun Agarwal, VP of Fundamental Research at Kotak Securities, stated that the U.S. has imposed a 25 percent tariff on imported cars, light trucks, and certain auto parts from outside North America. This could lead to higher car prices in the U.S., potentially reducing demand. Component suppliers may face cost pressures, and if they are unable to pass on the higher costs, their margins could be squeezed.
Jefferies highlighted that Indian auto and component exports have already been affected by the 25 percent tariff imposed in March. The brokerage cautioned that companies with substantial U.S. exposure will continue to experience challenges.
In today’s session, the shares of the company fell up to 9 percent, making a low of Rs. 1014.20 per share compared to its previous closing price of Rs. 1119.10 per share. Bharat Forge is a leading manufacturer of automotive components and forging products.
In today’s session, the shares of the company fell up to 6 percent, making a low of Rs. 610.10 per share compared to its previous closing price of Rs. 654.05 per share. Tata Motors is a prominent global automotive manufacturer, known for its cars, trucks, and electric vehicles.
In today’s session, the shares of the company fell up to 6.5 percent, making a low of Rs. 414.25 per share compared to its previous closing price of Rs. 450.00 per share. Sona BLW specializes in high-performance auto components, particularly for electric and hybrid vehicles.
In today’s session, the shares of the company fell up to 7.3 percent, making a low of Rs. 117.90 per share compared to its previous closing price of Rs. 128.95 per share. Samvardhan Motherson is a major player in automotive wiring and integrated solutions for the global automotive industry.
In today’s session, the shares of the company fell up to 2 percent, making a low of Rs. 11333.10 per share compared to its previous closing price of Rs. 11682.80 per share. Maruti Suzuki is the leading car manufacturer in India, specializing in compact and affordable vehicles.
In today’s session, the shares of the company fell up to 2 percent, making a low of Rs. 2557.65 per share compared to its previous closing price of Rs. 2612.55 per share. Mahindra & Mahindra is a key player in the automotive and farm equipment sectors, known for its SUVs and tractors.
Written by Sridhar J
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