Trump's 25% auto tariff: Tata Motors to Sona BLW, Indian companies that are likely to take a hit

Stock market today: Auto stocks across the globe plunged on Thursday, March 27, as US President Donald Trump on Wednesday announced a 25% tariff on foreign-made vehicles, effective April 2.

The White House press release said, ”Tariffs will be imposed on all passenger vehicles (sedans, SUVs, crossovers, minivans and light trucks) and certain auto parts."

The tariffs will go into effect on April 2, along with the reciprocal tariffs for which there is uncertainty in the trade world.

The Trump administration also planned to increase the range of auto parts under tariff if necessary. Currently, the list includes engine transmissions, powertrain equipment, and electrical systems.

Soon after the announcement, the automaker and ancillary stocks came under pressure. Japanese car manufacturer brands like Toyota, Nissan, Suzuki, Honda and Mazda plunged nearly 4% on Thursday.

Similarly, South Korean brands such as Hyundai and Kia also witnessed selling pressure.

Indian companies too are expected to feel the heat of auto tariffs as key players are major exporters to the US for cars and auto equipment.

Here is a list of top Indian companies likely to be impacted by the auto tariffs.

Tata Motors

According to the latest investor presentation, JLR contributes 71% of the total revenue to Tata Motors on a consolidated basis and derives 15% from the US.

Morgan Stanley, a global brokerage firm, also sounded alarms over the potential impact on the top line of JLR after the imposition of tariffs on April 2.

After the news broke, shares of Tata Motors slipped as much as 7% to ₹661 apiece on the NSE.

The stock eventually ended at ₹669 apiece, down 5.5%.

Samvardhan Motherson

The leading auto equipment manufacturer is expected to see the impact of the 25% auto tariffs as the company derives 20% of its revenue from the US, which is also the second largest revenue contributor to the company, followed by Germany, China, and Spain.

In the latest conference call, the company said the impact of tariffs will be passed on to customers and could see a lagging effect on the financials by one quarter. The company produces auto equipment like wiring harnesses, vision systems, integrated assemblies, door panels, sunroofs, fuel tanks, and other polymer products. Shares closed 2.6% lower on Thursday at ₹131 apiece on the NSE.

Bharat Forge

The company derives 44% of its revenue from the US and supplies mostly engine and transmission parts, which are included under tariffs.

However, the company has two manufacturing plants in the US through its subsidiaries, with a 30,000 MTPA steel forging capacity and a 10,000 MTPA aluminium forging capacity.

These plants produce a range of auto components, including control arms, cylinder heads, crankshafts, connecting rods, chassis components, engine and transmission components, and subassemblies for automotive OEMs.

Hence, the direct impact of auto tariffs on Bharat Forge is expected to be limited, as it produces key parts in the US itself, which does not carry any tariff. Bharat Forge's share price recouped early morning losses to close 2.3% lower at ₹1,155 apiece on the NSE.

Sona BLW Precision Forgings

The company is engaged in manufacturing and supplying engineered automotive components such as assemblies, gears, conventional micro-hybrid motors, BSG systems, and EV traction motors. The company derived 44% of its revenue from the US, followed by India at 28%, Europe at 22%, and the rest of the world at 6%. The shares came under pressure and closed 6.2% lower on Thursday after the tariff announcement.

India’s auto exports to the US are valued at approximately $6-7 billion as of FY24, which is expected to take a hit with the tariffs.

However, India is actively working with its US counterpart to find the middle ground on the tariff situation between the two countries.

Till then, the stocks are expected to remain under pressure as uncertainty persists over the actual impact of the tariff on these companies.