Solely 3 Nifty Auto shares zoom this yr. Will Tesla’s India entry hold Motown in crimson?

Indian auto shares have been below strain, with the Nifty Auto index shedding 7 per cent in February up to now and exhibiting an analogous decline in 2025 YTD. Whereas the Nifty Auto sector remained flat in January, it has been in a corrective section since October 2024, shedding 21 per cent of its worth. The downturn has been fueled by weak gross sales, slowing city shopper demand, and contracting margins.

Including to issues, automakers count on a average efficiency within the monetary yr 2025-26, mirroring the present fiscal yr’s pattern. Weak spot in small automotive gross sales—pushed by affordability challenges, easing pent-up demand, and a excessive base impact—has considerably impacted the sector’s development trajectory.

Moreover, exterior elements such because the Donald Trump administration’s proposed 25 per cent tariff on vehicle imports to the U.S. and reviews of Tesla’s potential entry into India have additional weighed on sentiment. Tesla’s arrival may intensify competitors within the electrical automobile (EV) market, disrupting native carmakers’ growth plans.

Regardless of these headwinds, the Nifty Auto index stays up over 4 per cent previously yr, outperforming the benchmark Nifty, which has gained simply 1.5 per cent in the identical interval.

Nifty Auto Constituents: Winners and losers

To date in 2025, solely three of the 15 Nifty Auto index constituents have managed to remain in optimistic territory.

Maruti Suzuki is the highest gainer, up nearly 14 per cent in 2025 year-to-date (YTD) whereas Ashok Leyland and Eicher Motors have added over 1.5 per cent every.

In the meantime, Apollo Tyres has emerged as the largest laggard within the sector on this interval, down over 26 per cent adopted by Bosch, Samvardhana Motherson, and Bharat Forge, which have shed over 20 per cent every in 2025 YTD.

MRF has misplaced 19 per cent whereas Tata Motors, Exide and Hero Moto have misplaced over 10 per cent every.

Skilled Take: Must you spend money on auto house?

As India’s auto sector navigates a difficult section marked by slowing gross sales and margin pressures, analysts are intently watching the evolving regulatory panorama and the potential impression of Tesla’s entry into the market. 

Proposed EV insurance policies could damage funding in home ICE phase

HSBC has raised issues over India’s proposed EV coverage modifications, which may doubtlessly favour imported EVs over regionally manufactured inner combustion engine (ICE) autos. Studies counsel that the federal government is contemplating reducing import duties on EVs—an initiative believed to be aimed toward attracting Tesla following Prime Minister Narendra Modi’s discussions with Elon Musk within the U.S.

HSBC famous that the proposed 15 per cent import obligation on EVs is considerably decrease than the 43-50 per cent GST imposed on regionally produced ICE passenger autos, which additionally incur a further 13 per cent highway tax. Whereas India presently imports solely about 8,000 EVs yearly, the brokerage warned that such a coverage shift may deter long-term funding within the home ICE phase, doubtlessly impacting the broader auto business.

Tesla unlikely to disrupt home leaders

Based on brokerages CLSA and Nomura Tesla’s entry into India is unlikely to considerably impression native leaders like Maruti Suzuki or Tata Motors however may benefit key suppliers reminiscent of Sona Comstar, Sansera Engineering, and Motherson Sumi.

CLSA mentioned market pleasure surrounding Tesla’s entry into India may be overstated. Whereas a sub- ₹25 lakh Tesla mannequin may achieve market share, the brokerage doesn’t foresee the U.S. large considerably disrupting home leaders like Maruti Suzuki, Hyundai, or Tata Motors. As an alternative, it expects Tesla’s presence to speed up premiumization in India’s auto market. 

CLSA additionally emphasised that Tesla would require native manufacturing to scale successfully. Even with import duties lowered to beneath 20 per cent, pricing its fashions below ₹35-40 lakh could be troublesome and not using a home manufacturing base.

Echoing related views, Nomura mentioned that whereas Tesla’s entry may reshape the EV phase, established gamers will proceed to dominate, particularly within the mid-market and finances segments.

It believes that India’s evolving EV insurance policies will pace up electrical automobile adoption, making it simpler for international gamers like Tesla to spend money on the nation. The coverage modifications are additionally anticipated to spice up India’s EV infrastructure, benefiting key suppliers reminiscent of Sona Comstar, Sansera Engineering, and Motherson Sumi, Nomura added.

Disclaimer: The views and proposals made above are these of particular person analysts or broking corporations, and never of Mint. We advise traders to test with licensed specialists earlier than taking any funding selections.