M&M, Samvardhana Motherson, Tata Motors: Auto stocks see sharp decline; BSE AUTO index falls 1,200 points; check key reasons

The BSE AUTO index was trading around 2.5%, or 1,195 points, lower at 48,219.52 levels.

Besides, Samvardhana Motherson International shares were trading 4% lower at ₹126.75 apiece on the BSE.

A number of factors weighed on the sentiment that caused a big sell-off in the auto pack.

SIAM, as per the report, trimmed its sales projections for PVs, citing weak demand, affordability concerns, declining entry-level car sales, and a fading post-pandemic surge.

Besides, global brokerage firm Nomura has also reiterated the same.

The report forecasts a growth rate of 1.5% in FY25, followed by 5% in FY26 and 6% in FY27. However, the mass segment may continue to face challenges due to affordability issues, it said.

The report also highlighted that recently the Society of Indian Automobile Manufacturers (SIAM) pointed out that one of the key reasons for slow growth in the PV segment is affordability.

It stated that the rising costs due to currency depreciation could make vehicles more expensive for consumers, news agency ANI reported.

Further, as regards Samvardhana Motherson, one of the leading names in the auto components space, news reports say that weak global auto volumes will keep the stock under pressure.

The company reported a consolidated net profit of ₹879 crore for the third quarter ended December 31, 2024. The figure stood at ₹542 crore in the corresponding quarter of the previous fiscal year.

According to analysts, the profit was smaller than expected due to weak global car sales.

Samvardhana Motherson is India's leading auto parts maker by market capitalisation. Some of its customers include Maruti Suzuki, Mercedes-Benz, Volkswagen, Audi, and BMW.

Global car sales were down about 1% during the December quarter, the company said. The company added that its profitability was also hurt by a decline in margins at its top modules and polymers business to 8% from 8.8%.

The company earns about half of its revenue from parts like bumpers and the rest from wiring harnesses, rearview mirrors, sunroofs, and door and dashboard panels.

Per the report, the government is set to notify its new Electric Vehicle (EV) policy, which aims to lower import duties and attract global players like Tesla.

The proposed policy will allow companies to set up assembly operations in existing factories but will exclude past investments and land or building costs from the required investment amount.

Manufacturers meeting the criteria will qualify for a 15% import duty—a significant reduction from the current 110% tariff, the report adds.

Hence, the shares of domestic manufacturers declined in the trade.