Following the US Environmental Protection Agency and the California Air Resources Board announcing their findings last Friday that Volkswagen had manipulated some of its diesel cars to cheat US emissions tests and Volkswagen conceded to having indulged in the fraud, the company’s stock price tanked 33 per cent.
This has had ripple effect not only on its listed global peers, such as Ford, BMW, Audi, Renault and Toyota, but also Indian companies, which are exposed to global markets, such as Tata Motors, Bosch India, Bharat Forge, Motherson Sumi Systems and Sona Koyo Steering Systems.
Maruti Suzuki, however, bucked the trend as it is seen more as a domestic play. Exports account for roughly 10 per cent of Maruti’s volumes. Further, Maruti derives close to 35 per cent of its revenues from rural markets. The company’s shares have gained 4 per cent after the RBI, on September 14, allowed higher FII buying limit of 40 per cent.
G Chokkalingam, Founder, Equinomics, said pressure on auto stocks will continue for a few more weeks as sentiment will remain hurt on fears of biting restrictions on global car manufacturers spreading to other developed markets as well. If that happens, it could affect the business prospects of select Indian auto component manufacturers that have presence in the export markets.
The biggest impact is likely to be on Motherson Sumi Systems, which derives 80 per cent of their consolidated revenues from global markets.
Bosch and Bharat Forge get 10-20 per cent, an analyst said.