Shares of Tata Motors and auto component companies fell by 1.5-2.5% on April 2, following US President Donald Trump’s announcement of a 25% tariff on all foreign-made automobiles. The decision, effective midnight April 2, is expected to significantly impact Indian auto firms exporting to the US.
Tata Motors and JLR Face Major Impact
Tata Motors shares declined nearly 2%, trading at Rs 660.45, while Hyundai dropped over 2% to Rs 1,643. The primary concern is the impact on Jaguar Land Rover (JLR), Tata Motors’ UK-based luxury car subsidiary, which has significant exposure to the US market.
JLR sold over 4 lakh vehicles globally in FY24, with 23% of sales coming from the US alone. Analysts believe the tariffs could hit revenue and profitability in the near term, forcing JLR to increase prices and cut costs.
Auto Ancillaries Also Affected
The Nifty Auto Index fell nearly 1%, with component makers like:
- Sona BLW Precision Forgings down over 1%
- Bharat Forge and Samvardhana Motherson (SAMIL) declining up to 3%
Trump’s Justification for Tariffs
In a press briefing, Trump defended the tariffs, citing unfair trade practices by foreign countries. He claimed:
- The European Union imposes tariffs of over 10% on US cars
- India charges 70% tariffs on imported automobiles
- South Korea and Japan implement non-monetary restrictions, making it hard for foreign automakers to enter
Trump also highlighted the imbalance in the US auto market, saying, “Toyota sells one million foreign-made automobiles in the US, but General Motors and Ford sell very little in Japan and other nations.”
The new tariff policy is expected to impact multiple global automakers, with Tata Motors and its subsidiary JLR among the hardest hit.
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Source: Moneycontrol.
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