NIN Web Desk : (Dr subhrojyoti chattopadhyay); The fear came true, India’s car companies suffered a big blow after the announcement of Donald Trump’s new tariff policy. The product companies associated with the car industry were not left out. Market experts say that these companies will enter the Indian market (Indian Car Market). The fall in shares is believed to be on the back of Donald Trump’s decision to impose a 25 percent tariff on all foreign auto imports. Shares of Jaguar Land Rover (JLR) parent Tata Motors fell 6.61 percent to Rs 663 in early trading on Thursday.
Eicher Motor shares fell more than one percent in morning trading. Whereas, Sona Blw Precision Forgings Ltd and Samvardhan Motherson declined by 4.52 percent and 4.35 percent respectively. Auto accessories prices other auto component makers with US exposure including Bharat Forge, Sansera Engineering, Suprajit Engineering, and Balakrishna Industries also turned red as tariff concerns spread to the sector. By 9:30 am, the Nifty Auto index started trading 1.5 percent lower.
* What can happen in the coming days?
While India’s direct exports of vehicles to the US are low, auto component manufacturers with significant foreign exposure may face losses. Among the companies likely to suffer are Tata Motors and Eicher Motors, auto parts makers like Sona BLW and Samvardhan Motherson. which primarily exports to Europe and major Asian markets supplying vehicles to the US.
* How will the company be affected?
Tata Motors does not directly export to the US, but its subsidiary Jaguar Land Rover (JLR) has a significant market presence, with the US contributing 22 percent of JLR’s total sales. JLR’s vehicles, primarily made in Britain and other global facilities, will now face a 25 percent tariff.
Eicher Motors: The maker of Royal Enfield motorcycles may also feel some impact, as the US remains a key export market for its 650cc models. Auto component manufacturers are facing margin pressure with rising tariffs, part of the burden on global automakers is expected to shift to component suppliers, impacting profitability.
Sona BLW Precision Forgings: About 66 percent of Sona Comstar’s revenue comes from the US and European markets. To reduce dependence on Western markets, the company is expanding its footprint in China, Japan and South Korea, aiming for these regions to contribute more than 50 percent of revenue in the coming years.
Samvardhan Motherson International (SAMIL): As one of India’s largest auto component manufacturers, Motherson supplies components to major US carmakers such as Tesla and Ford. This will have an impact on its local production in the US and Europe. Other key companies in that sector include Bharat Forge, Sansera Engineering, Suprajit Engineering, and Balakrishna Industries. All of which have substantial export exposure.
* What is the impact on global markets?
Wall Street fell ahead of Trump’s announcement Wednesday afternoon, with shares of General Motors down 3.1%, while Ford gained 0.1%. In Japan on Thursday, Toyota, the world’s top-selling automaker, fell about 3.5%, while Nissan shed as much as 2.5% and Honda as much as 3.1%. Mitsubishi Motors fell 4.5%, Mazda shed 5.9% and Subaru shed 6.1%. In South Korea, Hyundai shares fell 2.7%.
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