Tata Motors, M&M, Hyundai Motor, Maruti Suzuki: Auto stocks fall up 7% after tariff announcements

Led by Tata Motors, Indian automobile stocks saw a sharp downfall on Thursday after the US President Donald Trump announced painful tariffs of 25 per cent on all imported vehicles and parts as he presses hardball trade policies many fear will spark a recession. He also cited that the move would boost domestic manufacturing and generate $100 billion annually.

The move led to a sharp correction in auto counters, particularly Tata Motors, which tumbled nearly 6.7 per cent to Rs 661.35 on Thursday, with its market capitalization slipping below Rs 2.45 lakh crore mark. Tata Motor's arm Jaguar Land Rover (JRL) has a significant exposure in the US market. The stock, which has already crashed 44 per cent from its 52-week high of Rs 1,179.05, is down 33 per cent in the last six months.

It was followed by another commercial vehicle maker Ashok Leyland, which tumbled more than 4.60 per cent to Rs 205.05 during the day, with its total valuations slipping below Rs 61,500 crore mark. The stock had settled at Rs 214.95 on Wednesday, while it is down 23 per cent from its 52-week high of Rs 264.70 apiece.

Shares of Mahindra & Mahindra and Hyundai Motor India dropped more than 1.7 per cent each to Rs 2,696 and Rs 1,680.25 respectively, while Maruti Suzuki India was down 0.7 per cent at Rs 11,650 in the early session. Force Motors was down 1 per cent for the day.

Ashok Leyland is deciding for cessation of Switch’s UK manufacturing and assembly operations, for which, it has begun employee consultations. The weak demand for EV buses and the uncertain outlook for e-buses in the UK has made manufacturing operations unviable in the region, and hence the decision.

Post restructuring, Switch UK will cease to be earnings dilutive at a consolidated level, which is a key positive for Ashok Leyland, said Motilal Oswal. "Neither of the Switch entities are expected to need any funding support in the near term. However, the recent increase in promoter pledge is likely to remain an overhang on the stock, added with a 'buy' rating and a target price of Rs 255," it said.

Nuvama Institutional Equities remain constructive on the automotive sector and estimate tractors, SUVs and 2Ws would clock high single-digit growth over FY25–27E, outpacing CVs. It has picked TVS Motor, Mahindra & Mahindra, Motherson Sumi and Uno Minda from the auto and auto ancillary space.

Indications that levies lined up for the president's 'Liberation Day' on April 2 would be less severe than feared had given investors a little hope, and helped markets chalk up much-needed gains. The latest announcement did little to soothe nerves of investors, which has remained on the tenterhooks amid the uncertainty.

Not only Indian auto companies, Tokyo-listed Toyota and Honda shed more than 3 per cent each while Nissan was off 2.5 per cent. Seoul-listed Hyundai gave up more than four per cent in the early Asian trade. Even US-listed car giants also tumbled with General Motors, Ford and Stellantis all deep in the red in after-hours trade.