Trump tariff on imported cars: Jaguar Land Rover, auto parts units may take a hit

Trump's 25% tariff on imported cars will impact Tata Motors' JLR and U.S. auto component manufacturers significantly.

U.S. President Donald Trump’s announcement to impose a steep 25% tariff on imported cars and auto parts will hit Tata Motors’ luxury car subsidiary Jaguar Land Rover the most and several auto component manufacturers, analysts said. 

“The U.S. is not a significant export destination for India’s vehicle exports. However, Tata Motors could face an impact due to JLR, which derives over 30% of its sales volume from the U.S. market in 9MFY25,” said Mrunmayee Jogalekar, auto analyst, Asit C Mehta Investment Interrmediates Ltd.

“With no manufacturing facility in the U.S., all JLR vehicles will be subject to tariffs, which could impact pricing and profitability,” she said.  Tata Motors shares on Thursday fell 5.56% to ₹668.60 on the BSE.

“For the Indian auto components industry, the U.S. remains a key export market, contributing 27% to total exports in FY24. Tariffs are expected on key components such as engine, transmission, powertrain, and electrical parts,” she said.

“This could have a greater impact on companies like Sona Comstar (43% revenue from North America) and Samvardhana Motherson (18% revenue contribution). However, most other component manufacturers have a well-diversified export presence, which could mitigate the overall impact,” she added.

According to Anuj Sethi, senior director, Crisil Ratings, the operating margins of Indian auto parts manufacturers-exporters will be hit by 1.25-1.5% (125-150 basis points) from the current 12–12.5% range, assuming full absorption of the tariffs.

“About a fifth of the revenue of India’s auto component sector is derived from exports. Of this, 27% is to the U.S. market alone,” Mr. Sethi said.