M&M, Eicher Motors, Bajaj Auto shares fall up to 2% amid Mexico's tariffs, profit booking

Auto stocks decline

The shares of automakers and auto component manufacturers dropped in trade on December 15, pushing the Nifty Auto index down nearly 1 percent. The index has now snapped a two-session gaining streak due to multiple key factors.

The Nifty Auto index fell 0.91 percent to 27,568.10. The index closed as the top losing sector on the market today. Here are the key reasons behind the downturn in the sectoral index today:

Mexico imposes 50% tariff on Indian goods:

Earlier last week, Mexico imposed 50 percent tariff on Indian goods. The Mexican Senate approved a new tariff regime effective January 1, 2026, targeting imports from countries without a free trade agreement (FTA) with Mexico, including India, China, South Korea, Thailand, and Indonesia.

The tariff hike follows warnings from the Trump administration about low-priced Chinese goods entering the U.S. via Mexico. Mexico framed the measure as a step to protect its domestic industry, preserve jobs, and correct distortions caused by cheap imports.

"The tariffs are expected to affect a wide variety of goods including automobiles, auto components, steel, aluminium, textiles, plastics, etc. In FY25, India’s exports to Mexico totalled USD 5.7bn, which was 1.3% of India’s total exports. In terms of export value, this ranks Mexico as the 21st largest export destination for India in FY25. The top 6 commodities exported to Mexico from India in FY25 were auto and auto components, electronics, machinery, organic chemicals, aluminium and iron and steel," said JM Financial.

Among these, auto and auto components, along with aluminium, are the goods that are expected to be most affected by these tariffs as Mexico is the second largest export destination for Indian auto and auto components, the domestic brokerage added.

Profit-booking:

The fall in the share prices also may have been driven by profit-booking. The index had gained more than 1.6 percent (around 463 points) during the past two sessions of recording gains. It rose around 2.5 percent in the past 30 days.

The index is near its 52-week high of 28,099.65. Investors may have begun to book profits at elevated levels.

Uncertain outlook for 2026:

Citi has said that macro tailwinds will likely drive Indian auto sales in 2026. Macro factors, including GST, interest rate cuts and income tax restructuring, will continue to support Indian auto sales in 2026, it added.

Citi sees car sales rising 5.1 percent in FY26 and 5.2 percent in FY27. It expects annual two-wheeler sales up to March 2026 to grow 5.5 percent and 7 percent the following year

Car market leader Maruti Suzuki remains Citi's top pick, followed by Mahindra & Mahindra (M&M) and Hyundai Motor India. However, Citi added that automakers' gross margins will likely dip in 2026 as they navigate segment competition as well as rising costs after a stable 2025.

Uncertainty around geopolitics and global demand will act as a negative for Jaguar Land Rover owner Tata Motors Passenger Vehicles, Citi said. Regulations on emissions will remain a key monitorable in 2026, it added.

Top auto losers today:

Mahindra & Mahindra (M&M) shares were the top losers on the index today, falling nearly 2 percent to close at Rs 3,609.70 per share. Royal Enfield-maker Eicher Motors also fell around 2 percent.

Sona BLW Precision Forgings and Bajaj Auto shares fell more than 1 percent each, while Maruti Suzuki, Samvardhana Motherson and Bharat Forge shares were down around 1 percent each. Tata Motors Passenger Vehicles, TVS Motor Company, Exide Industries and Hero MotoCorp shares closed in the red with marginal losses.

Hyundai Motor India, which is not a constituent of the Nifty Auto index, dropped nearly 2 percent after global brokerage Citi lowered its target price on the stock by over 5 percent to Rs 2,700 while maintaining its 'Buy' rating, according to an NDTV Profit report.

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