Tata Motors PV, Maruti Suzuki, Ashok Leyland, auto stocks drop up to 3% as RBI signals rate cuts are ‘off the table’

Indian auto shares weakened on Wednesday after the RBI raised the repo rate, adopted calibrated tightening and indicated that rate cuts were not under consideration. Tata Motors PV, Maruti Suzuki, M&M and Ashok Leyland were among the names under pressure, with declines reaching 3%. Maruti was quoted at Rs 11,402.00, down 0.4% for the day, while Ashok Leyland was at Rs 148.39, lower by 0.5%. Over one month, Maruti had fallen 10.3% and Ashok Leyland 12.2%, while the auto sector was down 6.3%. Over three months, the sector had lost 3.4%.

The policy shift matters because higher borrowing costs may make vehicle loans less affordable and raise funding costs for manufacturers and dealers holding elevated inventories. That could weigh on passenger vehicles at Maruti Suzuki, Tata Motors PV and M&M, and commercial vehicles at Ashok Leyland. Power shares may also remain rate sensitive through project funding costs; the sector was down 4.3% over one month and 11.7% over three months. Strong Q2 revenue growth may not protect auto margins if commodity costs rise and pricing power stays limited. Tight financing, high inventories and cost pressure would confirm the reading, while resilient demand, normalising stocks or better pricing would weaken it.