Tata Motors, Samvardhana shares tumble up to 7.5% as Trump announces 25% tariff on foreign-made vehicles; key details to know

The stocks fell as US President Donald Trump on Wednesday announced a 25% tariff on imported cars and light trucks starting next week, widening the global trade war. The move, according to auto industry experts, will drive up prices and hinder production.

"What we're going to be doing is a 25% tariff for all cars that are not made in the United States," Trump said at an event in the Oval Office.

Following the development, shares of Tata Motors slipped as much as 6.65% to ₹661.10 apiece on the NSE, while Samvardhana Motherson shares tumbled up to 7.5% to ₹124.73 apiece on the stock exchange.

Among other names, Sona BLW Precision was trading 4.63% lower at ₹473.95 apiece on the NSE, while Bharat Forge was down around 3% at ₹1,147.95 on the NSE.

The whole auto pack was under pressure. Last seen, the NIFTY AUTO index was trading 1.38% lower at 21,442.25 levels, with 13 out of 15 constituents trading in the red.

Tata Motors is in the limelight, as the US is the key market for Jaguar Land Rover (JLR), its flagship company.

The management of Tata Motors had recently reiterated that JLR will meet its fourth-quarter guidance of 10% EBIT margins and also be net debt-free by the end of the current financial year.

In its analyst meet earlier this month, Tata Motors highlighted that the North American market continued to remain strong. The EU and UK, which have been muted so far, have also started showing signs of improvement. While the demand situation in China remained challenging, JLR has been relatively outperforming its peers, it said.

Concerning margins, the company expects variable marketing expenditure (VME) spending to reduce with the run-down of Jaguar volumes as VME on Range Rover remains low at 2-2.3%.

Warranty costs, however, may remain elevated owing to the relatively higher cost of labour and repairs in the US, which is now the largest region for JLR.

"Overall, the company remains confident in meeting its FY25 guidance (revenue of £29bn; EBIT margin at >=8.5%; FCF of £1.3bn). Capex is expected to peak in FY25/26, and despite this, the company has maintained its guidance of turning net cash positive during FY25," said JM Financial in its report.

As regards Samvardhana Motherson, one of the leading names in the auto components space, recent news reports have highlighted that weak global auto volumes will keep the stock under pressure.

Besides, according to reports, about 18% of Motherson’s revenue comes from the US and 4% from Mexico.

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

The company reported a consolidated net profit of ₹879 crore for the third quarter that 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.