Hyundai Motor India dropped 3.6%, while Mahindra & Mahindra fell 4.3%. Maruti Suzuki India declined 1.5%, while Tata Motors Passenger Vehicles and Tube Investments of India ended over 1% lower.
“The initial cut in tariffs is expected to be around 40% and gradually phased out to 10% over the years,” said Sagar Shetty, auto analyst at StoxBox. “M&M and Hyundai (shares) saw sharper declines as they could face relatively higher competition from European makers such as Renault and Volkswagen.”
Analysts expect a limited impact in near term as most European cos are ‘premium’ players
Shetty said Tuesday’s fall was more of a knee-jerk reaction. Volkswagen, BMW, Mercedes-Benz and Renault are expected to benefit, according to Reuters, as India plans to reduce duties on automobiles imported from the EU from 110% to 10% over five years, subject to an annual quota of 250,000 vehicles.
Mahindra & Mahindra derives a larger share of its passenger vehicle (PV) revenues from premium models, with top-end variants priced above ₹20 lakh (ex-showroom). Similarly, Hyundai’s Creta is the company’s best-selling model at this price point, which is why these stocks saw a sharper sentiment-led decline than others, said Shashank Kanodia, lead analyst for the auto sector at ICICI Direct. The Nifty Auto Index fell as much as 2.2% during the session but pared some losses to close 0.9% lower. Analysts said the market for European luxury brands such as Mercedes, Audi, BMW, Rolls-Royce and Aston Martin is vastly different from the affordable segments where most Indian OEMs operate.
“Its mostly the high-end luxury segment, which is very small in the Indian market, would be impacted,” said Narendra Solanki, head of fundamental research (investment services) at Anand Rathi Share and Stock Brokers. Indian manufacturers do not operate meaningfully in this segment, and a recovery in share prices is expected as the market adjusts once full details of the deal emerge, Solanki said.
