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Auto ancillaries to get impacted however impact on OEMs limited

ICICIdirect Research 07 Apr 2025 DISCLAIMER

US has imposed tariffs on auto space in two parts (i) 25% in the past week on automotive vehicle imports and engine components and (ii) blanket 26% import tariff on all imports announced yesterday

Domestic forging companies have large exposure to US -CV market, impacting forging players such as Bharat Forge (40% of standalone revenues) and Ramkrishna Forgings (30% of revenues).

It will auto impact transmission component companies such as Sona BLW Precision Forgings Ltd (43% of revenues from US)

The present update of blanket reciprocal tariff of 26% is negative for other auto component players such as Balkrishna Industries (US share of revenues pegged at ~16%), Sansera Engineering (US share of sales at ~10%) among others.

This also bleaks export outlook for other players (especially tyres) who were counting on exports to outgrow peers.

From the OEM standpoint however, US is not a major destination for vehicles exported from India. So, this will not have any meaningful impact on domestic OEMs except Tata Motors and Eicher Motors.

North America (largely US) is a very important market for Tata Motors overseas luxury PV arm i.e. JLR. Its share in volumes is pegged at 33% and is the key growth region.

Eicher Motors premium motorcycle franchise i.e. Royal Enfield enjoys ~8% market share in the middle-weight motorcycle category in US.

Recently, given US imposed a softer 10% blanket tariff on UK goods vs. 26% for India and ~34% for China, signifying a relatively softer stance for the European country, which makes us believe that UK will be able to negotiate a better deal with US in times to come, in-turn benefitting JLR which has a large manufacturing base in UK.

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