Shares of auto companies have been deeply affected by the slowdown in the auto industry. Stocks of the top three auto companies have plunged up to 35 per cent over the last six months as compared to the 37 per cent decline in the BSE auto index. On the contrary, the BSE Sensex has gained nearly 4 per cent during the same period.
Weak sales, disappointing quarterly results, subdued demand and an overall slowdown in the economy, have fuelled the fall.
On Wednesday, auto stocks declined nearly 3 per cent in intra-day trade on the Bombay Stock Exchange (BSE), led by index heavyweights such as Tata Motors, TVS Motor Company, Maruti Suzuki India, Mahindra & Mahindra and Motherson Sumi Systems.
In the last six months, the BSE auto sector index skidded 36 per cent and the NSE's Nifty auto index too dropped nearly 36 per cent in the same period, dented by weak consumer sentiment and slowdown in the sector. Among the top auto companies, home-grown Tata Motors was the top laggard, followed by Mahindra & Mahindra and Maruti Suzuki India.
Shares of Tata Motors, the country's largest automobile manufacturer, declined as much as 35.46 per cent in the last six months. The stock has fallen 55.5 per cent in the last one year and 15.41 per cent in the last one month.
Maruti Suzuki India shares declined 12.11 per cent in the last six months and 35 per cent in the last one year.
Meanwhile, Mahindra & Mahindra shares tumbled 15.73 per cent in the last six months and 45.12 per cent in the one year period.
According to industry body Society of Indian Automobile Manufacturers (SIAM), the entire auto sector is reeling under a prolonged slump, affecting vehicle sales across all segments. In July, wholesale passenger vehicle sales fell for the ninth straight month amid overall slowdown in the economy. Sales in auto sector have fallen in 12 of the 13 months since July 2018 due to higher inventory levels at dealers' ends, negative consumer sentiments, production cuts, delayed monsoon and high base.
While the domestic slowdown was the key drag on their financials, auto companies also bore the brunt of the slowdown in the global markets. The automakers are laying off staff and temporarily halting production to align their inventory of goods and to keep costs in check.
Last week, Finance Minister Nirmala Sitharaman announced a slew of measures including hiking depreciation benefit on all vehicles from 15 to 30 per cent, deferring a proposed multi-fold increase in registration fee and reversing a five-year old ban on government purchases to provide a boost to the domestic automobile industry, which has been battling an unprecedented and protracted slowdown in the domestic market.