Trump tariffs hit hard: Samvardhana Motherson, Sona BLW shares drop 8% over Mexico worries
Shares of India’s auto ancillary stocks, including Sona BLW Ltd. and Samvardhana Motherson Ltd., fell up to 8% on Monday. This drop came after US President Donald Trump announced a 25% tariff on goods from Mexico and Canada. The tariffs will take effect on February 2, 2025, US time. In addition, the US has imposed a 10% tariff on China.
Brokerage firm Elara Securities highlighted that auto component exports from India to Mexico make up 3% of India’s total exports, amounting to $656 million. These exports mainly consist of metallurgical components like forgings and casting products. Major car manufacturers, such as General Motors, Toyota, and Volkswagen, rely on vehicles produced in Mexico. Around 30-40% of GM and Toyota vehicles and nearly 60% of Volkswagen vehicles sold in the US are produced in Mexico and Canada.
Elara added that Mexico contributes about 4% to the overall revenue of these companies. The brokerage expressed concerns about potential volatility. It noted that it remains unclear how Original Equipment Manufacturers (OEMs) will shift their production to avoid the price hikes in US vehicles caused by the tariffs.
Sona BLW generates around 2% of its revenue from Mexico. Although most of the product value addition happens in India, Mexico mainly serves as an assembly base. If OEMs move production to the US, the company might be able to cater directly to US facilities, according to Elara’s analysis.
The brokerage also noted that the tariffs on China might further increase component prices. This could lead US companies to seek alternatives, potentially benefiting India. India could become an alternative sourcing hub as China’s diecasting components capacity is among the largest globally.
On Monday, as many as 41 lakh shares of Samvardhana Motherson, or 0.1% of the company’s outstanding equity, were traded in a block deal. The identities of the buyers and sellers remain unknown. Samvardhana Motherson’s shares fell 8.1% to ₹131, a 40% decline from its peak. The stock also dropped 10% over the last month.
Meanwhile, shares of Sona BLW also declined by 5%, trading at ₹478.9. The stock is down 38% from its peak and has fallen by 15% over the past month.
The overall sentiment in the market reflects concerns over how the US tariffs will affect India’s auto component industry. As car manufacturers in the US assess their production strategies, India may face both challenges and opportunities in the evolving global trade landscape.
