Tata Motors shares may take hit as JLR halts exports to US for one month

Shares of Tata Motors Ltd are in focus on Monday amid reports the UK-based arm Jaguar Land Rover stopped shipments to the US, following the 25 per cent tariffs announced by the US on all auto and auto component imports. 

In FY24, JLR derived for 23 per cent revenue and 26 per cent  of the total wholesale volume from the US. JLR’s volume exposure to the US had in fact increased to 33 per cent in the first 9MFY25. JLR’s cars are manufactured in the UK, except for the Defender, which is manufactured in the EU (25.9 per cent of US volumes in 9MFY25F).

Jaguar Land Rover (JLR) will halt exporting JLR units to the US for a month starting from April 7. "As we work to address the new trading terms with our business partners, we are taking some short-term actions, including a shipment pause in April, as we develop our mid- to longer-term plans," JLR said in an emailed statement, Reuters reported it as saying.

In 11MFY25, JLR sales increased by 39 per cent  YoY in the US. Its market share among premium OEMs in the US increased to 10.9 per cent from 8.4 per cent in FY24, HSBC Research said in a recent note. In the UK, JLR sales increased were up 6.6 per cent YoY and market share was stable at 17.4 per cent against 17.3 per cent in FY24. In Europe, JLR sales decreased 2 per cent YoY in 11MFY25, and its market share declined to 6.1 per cent from 6.6 per cent in FY24.

Nomura had earlier expected the impact of Trump tariffs to be $3,700 or 8 per cent of average selling price. It said even with a 50 per cent pass on via price hikes of 4 per cent could impact US auto demand by 8 per cent or 10 lakh vehicles. This is against 1.6 crore new US car sales in 2024.  

Last week, CLSA downgraded the Tata Motors stock to 'Outperform' from high conviction outperform. It slashed its target price on Tata Motors to Rs 765 from Rs 930, as it suggested a 14 per cent drop in JLR volumes in FY26 due to trump tariffs. It also expected Ebitda margin to drop to 7 per cent in FY26 and FY27 against 9 per cent in FY25.

The foreign brokerage noted that close to 31 per cent of JLR's retail sales come from the US and that models are made in the UK. Tata Motors is,  thus, exposed to the higher duty. It noted that the US in the past has been a relatively lower-margin market for JLR.