Indian Auto Sector Faces Turbulence Amid Global Challenges

The Indian automobile sector anticipates weak Q4 results due to subdued demand locally and globally, and structural challenges in global supply chains. Despite pricing and cost-saving efforts, major OEMs face pressure, though some gains in operating margins are expected amidst complex trade dynamics and seasonal variations.

According to HDFC Securities, the Indian automobile sector braces for disappointing fourth-quarter results as it contends with sagging demand in both domestic and international markets. The sector faces extended business challenges weaved with higher US tariffs and intricate global supply chains possibly undergoing structural impacts.

The report sheds light on an anticipated sluggish growth trajectory for most original equipment manufacturers (OEMs), where demand remains muted on home and international turfs. However, a quarter-on-quarter boost in operating margins is plausible due to better operating leverage and lowered raw material prices.

Auto behemoths like Mahindra & Mahindra, Maruti Suzuki, TVS Motor, and Hero MotoCorp might witness an erosion in margins attributed to expenditures from recent auto expos. Conversely, commercial vehicle majors such as Ashok Leyland and Tata Motors are poised for marginal gains, underpinned by enhanced leverage.

(With inputs from agencies.)