Quote on tariff impact on the Auto Sector by Arun Agarwal, VP - Fundamental Research - Automobiles, Kotak Securities

Below the Quote on tariff impact on the Auto Sector by Arun Agarwal, VP - Fundamental Research - Automobiles, Kotak Securities
US has imposed 25% tariffs on imported cars, light trucks and select auto parts sourced from outside of North America. Further, almost 150 auto parts will face tariffs at similar rate. This move could result into increase in car prices in the US and cost pressure for component suppliers. In the event of car prices going up, the US car market may witness a steep volume decline and that can impact revenue for component players supplying parts to the US car/light truck industry. Further, margins of suppliers may come under pressure as they may need to partly absorb cost pressures. We believe there will be some impact, which the suppliers will have to bear, leading to negative implications on margins. Having said that, it needs to be seen on how higher tariffs are absorbed across the supply chain that includes customers, OEMs and suppliers. The extent of impact for Indian players will also depend on the US-India bilateral agreement over the next few months
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