Shares of Tata Motors, Sona BLW Precision Forgings, and Samvardhana Motherson plunged up to 7 percent on March 27 as investors hit the brakes on auto stocks, spooked by Trump's 25 percent tariff on foreign car imports to the US.

While the direct export of fully assembled vehicles from India to the U.S. is relatively limited, auto component makers with substantial export exposure will feel the impact more acutely. The companies likely to be impacted include automakers Tata Motors and Eicher Motors, as well as auto component makers Sona BLW, Samvardhana Motherson, and several others, which predominantly export to Europe and major Asian markets such as Japan, South Korea, and China, which supply automobiles to the US.

Global automakers are likely to pass on some of the price escalation to component makers, putting pressure on their margins. In FY24, India’s auto component exports stood at $21.2 billion, while the global auto component trade is valued at $1.2 trillion. India’s exports to the U.S. and Europe—the largest auto component importers—accounted for roughly 4.5 percent of total global trade.

Tata Motors: Tata Motors does not export directly to the U.S., but its subsidiary, Jaguar Land Rover (JLR), has a significant presence in the American market. According to JLR’s FY24 annual report, the US accounted for 22 percent of its total sales. In FY24, JLR sold approximately 400,000 units globally, making the U.S. one of its largest markets. JLR vehicles sold in the U.S. are primarily manufactured in the UK and other international facilities—all of which will now attract a 25 percent tariff.

Eicher Motors: The motorcycle maker may see some impact, as the U.S. is a major export market for Royal Enfield’s 650cc motorcycles. Eicher Motors' share price edged lower by about 1 percent in the morning.

Auto component makers under pressure

With global OEMs likely to pass on the impact of higher U.S. tariffs, auto component manufacturers with high export exposure may see margin pressure.

Sona BLW Precision Forgings: Sona Comstar manufactures automotive systems and components, including differential gears and starter motors. The company derives about 66 percent of its revenue from the U.S. and European markets. To mitigate risks, Sona BLW has been diversifying its export base by expanding into China, Japan, and South Korea, aiming for these Eastern markets to contribute over 50 percent of its revenue within five years.

Samvardhana Motherson International Ltd (SAMIL): One of India's largest auto component manufacturers, Motherson has a strong presence in both Europe and the U.S. The company supplies components to major American carmakers, including Tesla and Ford. However, since Motherson has built significant local manufacturing facilities in both the U.S. and Europe, it is less vulnerable to import tariffs compared to component makers relying solely on exports.

Other auto component makers with US exposure, including Bharat Forge, Sansera Engineering, Suprajit Engineering, and Balkrishna Industries, also slipped into the red as tariff worries rippled through the sector. At about 9:30 am, the Nifty Auto index was trading 1.5 percent lower.