Tata Motors, Bharat Forge, other auto shares extend tariff-led selloff to crash up to 8%

Tata Motors' luxury subsidiary Jaguar Land Rover (JLR) has deep exposure to the American market

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26 Aug, 2025 12:21

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Shares of automakers and auto component makers strongly continued to decline on April 4, pulling the Nifty Auto index down nearly 3 percent as the 25% reciprocal tariff on imported automobiles by US President Trump continued to rattle global trade prospects.

A report by Tata Mutual Fund said India exports nearly $6.8 billion worth of automobiles and auto components to US, and the tariff announcement is likely to impact the price competitiveness of ancillary companies too.

Bharat Forge shares fell nearly 8 percent, owing to its significant exposure to US market, where Class 8 trucks having a strong export base.

Bharat Forge Chairman & Managing Director Baba Kalyani had recently said that the US constitutes nearly 20 percent of its total exports, hence, the tariffs are expected to impact their revenue.

The company has recently seen a strong decline in the Class 8 truck orders. As per data from ACT Research, cited by CNBC-TV18, Class 8 truck orders in North America have declined for a fourth consecutive month, further fuelling the sharp selloff.

Tata Motors shares fell nearly 6 percent as the company is expected to see a significant hit from the tariffs, as subsidiary Jaguar Land Rover (JLR) has deep exposure to the American market. JLR sold over 4 lakh units globally in FY24, of which about 23 percent were sold in US alone.

"The US alone contributed over a fifth of JLR's total revenue last year, making it a crucial market. With limited options to maintain margins and meet prior guidance, JLR will likely resort to price hikes and cost efficiencies. However, these strategies won’t yield immediate results, and a near-term hit to both revenue and profitability is expected," said Nirav Karkera, Head of Research at Fisdom.

"If JLR can raise prices proportionally, the revenue impact will be minimal. However, if demand falls due to higher prices, both sales volume and margins will suffer,” said Siddhartha Khemka, Head of Research and Wealth Management at Motilal Oswal in a conversation with Moneycontrol.

Also Read: Will Indian carmakers, ancillary companies face a speed bump?

The selloff in automotive stocks with exposure to US spilled on to domestic-oriented companies as well, with Maruti Suzuki shares dropped nearly 2 percent, while Mahindra & Mahindra shares closed with marginal losses. Nifty Auto index tumbled nearly 3 percent on April 4.

Shares of auto component makers like Sona BLW Precision and Samvardhana Motherson also saw a significant decline in their share prices, falling over 6 percent and 7 percent respectively.

Vaibhav Porwal, Co-Founder of investment solutions company Dezerv said, "Export-driven sectors like Information Technology and auto components face significant challenges as they are directly exposed to tariff impacts and broader global trade friction. In this market environment, gains will likely be concentrated in select stocks rather than broadly distributed, making careful stock selection and active management strategies more effective than passive approaches."

Nikunj Saraf from Choice Wealth, said, "The 26% US tariff on Indian exports introduces near-term economic headwinds, affecting key industries like automobiles, textiles, and gems & jewellery."

During the tariff announcement from the White House on April 2, President Trump had cited high tariff by trading partners to argue for the tariffs. "Toyota sells one million foreign-made automobiles in the US and General Motors almost sells none. Ford sells very little. None of our companies are allowed to go into other countries," Donald Trump had said.

"In many cases, the friend is worse than foe in terms of trade. Such horrendous imbalances have devastated our industrial base, and put our national security at risk.," Trump added.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.