US President Donald Trump’s decision to impose a 25% tariff on all auto imports has sent shockwaves across the global automobile industry—and Indian auto companies are not spared from the ripple effects.
While India’s direct vehicle exports to the US are minimal, the impact will be felt through global supply chains. During early trading hours, most of the auto stocks tumbled—Tata Motors fell over 5%, Eicher Motors lost nearly 2%, Hyundai slipped nearly 1.7%, Samvardhana Motherson plummeted almost 6.4%, Sona BLW dropped over 4.4%, and Balkrishna Industries shed 3.4% (as of 9:30 am).
The Nifty Auto index was down 1.09% and trading at 21,505 (as of 10: 08 am).
India's auto component exports to the US was $6.79 billion in FY24, while the country's imports from the US stood at $1.4 billion at 15 per cent duty, reported PTI citing industry estimates.
Also Read: Most carmakers & consumers stand to lose as Trump’s tariffs spread the pain, Tesla one of the winners
Why are Indian auto stocks crashing?
One might assume that since India doesn’t ship cars to the US in large volumes, its auto sector should remain unscathed. But the reality is more complicated.
Take Tata Motors, for instance—it doesn’t export vehicles to the US directly, but its British subsidiary Jaguar Land Rover (JLR), which derives 22% of its sales from the US, now faces steeper import costs on UK-manufactured cars. Likewise, Eicher Motors’ Royal Enfield 650cc motorcycles, a hit among American riders, may see a demand slowdown as prices rise.
Also Read: What's in Trump's new 25% tariffs on US auto imports?
Auto component suppliers, too, are feeling the pinch. Sona BLW Precision Forgings, which derives 66% of its revenue from the US and Europe, could see margin pressures as global automakers shift cost burdens onto suppliers. The company is already pivoting—focusing on expansion in China, Japan, and South Korea, aiming for these markets to account for over 50% of its revenue in the next five years.
Meanwhile, Samvardhana Motherson International Ltd (SAMIL), a key supplier to Tesla and Ford, is better positioned, thanks to its manufacturing facilities in the US and Europe, which soften the blow of tariff-driven cost hikes.
With protectionist policies reshaping the industry, Indian automakers and suppliers must rethink their strategies—whether through market diversification, local production, or cost optimisation. In a world of shifting trade dynamics, adaptability will be the key to survival.
Global stocks bear the brunt of Trump's auto tariffs
The effects of the tariff move extended beyond India. Global stock markets took a hit, with shares of leading Japanese automakers Toyota, Nissan, and Honda declining between 3% and 3.7%.
Shares of global automakers fell in after-hours trading and US equity index futures slid, indicating stocks were headed for a lower open on Thursday.
Even ahead of Trump's announcement, shares of US-listed automakers fell on concerns that tariffs would send shock waves through a global auto industry that is already reeling from uncertainty caused by Trump's rapid-fire tariff threats and occasional reversals.
The US stock market also closed lower on worries over tariffs, which have dogged investors for much of the last month. The benchmark S&P 500 Index fell 1.1% ahead of the press conference, and is down more than 4% so far in March for its worst monthly performance in nearly a year.
In South Korea, Hyundai saw a 3.4% dip, while the Nikkei 225 index fell 1.1% as investor sentiment weakened. US equity markets also saw losses, with the S&P 500 dropping 1.1% amid concerns over escalating trade tensions.
The automotive industry remains a critical pillar of the global economy, and Trump’s tariff decision is expected to increase vehicle prices for consumers while potentially leading to job losses. According to the Center for Automotive Research, these levies could raise car prices by thousands of dollars and disrupt an industry heavily reliant on imported components.
As the trade landscape shifts, Indian automakers and suppliers must adapt by exploring market diversification, enhancing local production, and optimising costs to mitigate long-term risks.
While India’s direct vehicle exports to the US are minimal, the impact will be felt through global supply chains. During early trading hours, most of the auto stocks tumbled—Tata Motors fell over 5%, Eicher Motors lost nearly 2%, Hyundai slipped nearly 1.7%, Samvardhana Motherson plummeted almost 6.4%, Sona BLW dropped over 4.4%, and Balkrishna Industries shed 3.4% (as of 9:30 am).
The Nifty Auto index was down 1.09% and trading at 21,505 (as of 10: 08 am).
India's auto component exports to the US was $6.79 billion in FY24, while the country's imports from the US stood at $1.4 billion at 15 per cent duty, reported PTI citing industry estimates.
Also Read: Most carmakers & consumers stand to lose as Trump’s tariffs spread the pain, Tesla one of the winners
Why are Indian auto stocks crashing?
One might assume that since India doesn’t ship cars to the US in large volumes, its auto sector should remain unscathed. But the reality is more complicated.Take Tata Motors, for instance—it doesn’t export vehicles to the US directly, but its British subsidiary Jaguar Land Rover (JLR), which derives 22% of its sales from the US, now faces steeper import costs on UK-manufactured cars. Likewise, Eicher Motors’ Royal Enfield 650cc motorcycles, a hit among American riders, may see a demand slowdown as prices rise.
Also Read: What's in Trump's new 25% tariffs on US auto imports?
Auto component suppliers, too, are feeling the pinch. Sona BLW Precision Forgings, which derives 66% of its revenue from the US and Europe, could see margin pressures as global automakers shift cost burdens onto suppliers. The company is already pivoting—focusing on expansion in China, Japan, and South Korea, aiming for these markets to account for over 50% of its revenue in the next five years.
Meanwhile, Samvardhana Motherson International Ltd (SAMIL), a key supplier to Tesla and Ford, is better positioned, thanks to its manufacturing facilities in the US and Europe, which soften the blow of tariff-driven cost hikes.
With protectionist policies reshaping the industry, Indian automakers and suppliers must rethink their strategies—whether through market diversification, local production, or cost optimisation. In a world of shifting trade dynamics, adaptability will be the key to survival.
Global stocks bear the brunt of Trump's auto tariffs
The effects of the tariff move extended beyond India. Global stock markets took a hit, with shares of leading Japanese automakers Toyota, Nissan, and Honda declining between 3% and 3.7%.Shares of global automakers fell in after-hours trading and US equity index futures slid, indicating stocks were headed for a lower open on Thursday.
Even ahead of Trump's announcement, shares of US-listed automakers fell on concerns that tariffs would send shock waves through a global auto industry that is already reeling from uncertainty caused by Trump's rapid-fire tariff threats and occasional reversals.
The US stock market also closed lower on worries over tariffs, which have dogged investors for much of the last month. The benchmark S&P 500 Index fell 1.1% ahead of the press conference, and is down more than 4% so far in March for its worst monthly performance in nearly a year.
In South Korea, Hyundai saw a 3.4% dip, while the Nikkei 225 index fell 1.1% as investor sentiment weakened. US equity markets also saw losses, with the S&P 500 dropping 1.1% amid concerns over escalating trade tensions.
The automotive industry remains a critical pillar of the global economy, and Trump’s tariff decision is expected to increase vehicle prices for consumers while potentially leading to job losses. According to the Center for Automotive Research, these levies could raise car prices by thousands of dollars and disrupt an industry heavily reliant on imported components.
As the trade landscape shifts, Indian automakers and suppliers must adapt by exploring market diversification, enhancing local production, and optimising costs to mitigate long-term risks.
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Two Sharp with ET: Big winners & losers of Trump’s 25% auto tariff & RBI’s big move to woo FPIs
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