Nifty Auto index slumps 2% on Trump tariffs; Tata Motors share price worst hit, declines 6%

Stock Market today: Nifty Auto index declined by up to 2% in the morning trade on Thursday after US President Donald Trump imposed tariffs targeting the auto sector. Tata Motors emerged as the biggest casualty, with the share price declining 6%.

Trump announced the imposition of a 25% tariff on imported cars from April 2, hitting investor sentiment. The Nifty Auto index thereby saw a sharp beating, with Tata Motors, Samvardhana Motherson International and Bharat Forge being the largest losers.

The US equity market also declined sharply in overnight trade, which analysts attributed to the Trump administration's decision to impose a 25% tariff on the import of vehicles and auto components.

Trump Tariffs' Impact on Tata Motors

Tata Motors' share price was the worst hit in the auto pack following Trump's tariff announcement, as North America, mostly the US, contributed significantly to Jaguar Land Rover's (JLR) sales.

According to Jaguar Land Rover's fiscal year 2024 annual report, the US market accounted for more than a fifth of its total sales.

The latest tariff announcement comes as a fresh headwind for Tata Motors, which is already facing a slowdown in domestic commercial vehicle sales.

Domestic Auto Sector Outlook

However, on the positive side, analysts remain constructive on domestic sales of Indian automakers. While many brokerages are expecting some rebound in sales of Medium and Heavy Commercial Vehicles in FY26, they are watchful of sales pickup during the festive season in the near term.

Nuvama Institutional Equities expects March 2025 wholesale growth to be positive in tractors, two-wheelers and passenger vehicles, while commercial vehicle sales could decline marginally.

Tractor sales will grow in double digits, driven by a benign customer sentiment and a favourable base. The two-wheeler and passenger vehicle segments shall eke out low single-digit growth, despite muted customer sentiment, owing to inventory build-up with dealers before the festive season (Gudi Padwa, Chaitra Navratri), said Nuvama analysts.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.