M&M, Maruti Suzuki fall another 4%; what's making the Street nervous?

The stock price of Maruti Suzuki India was quoting lower for the seventh straight trading session, falling 12 per cent during the same period.

Share price of automobile companies today

 

Shares of automobiles companies, mainly passenger vehicles (PVs) were under pressure, with the BSE Auto index falling 2 per cent in Thursday’s intra-day deals. At 02:25 PM; the BSE Auto index was down 1 per cent, as compared to 0.26 per cent rise in the BSE Sensex.

 

Share price of Mahindra & Mahindra (M&M) was down 4 per cent at ₹3,322.80 in intra-day deals. In the past four weeks, the stock price of M&M has slipped 12 per cent.

 

Meanwhile, Maruti Suzuki India (MSIL) was down 3 per cent to ₹14,370 in intra-day trade. The stock price of the car maker was quoting lower for the seventh straight trading day, falling 12 per cent during the same period.

 

Why are M&M, Maruti Suzuki’s stock prices under pressure?

 

The India–European (EU) Free Trade Agreement (FTA) is expected to make it easier for European automakers to introduce more premium and luxury models in India, but carmakers say consumers should not expect immediate price cuts. 

 

While the pact may eventually reduce import duties, companies note that phased implementation, safeguards, and high demand for luxury vehicles mean prices are likely to remain stable in the near term. Luxury car sales in India touched about 51,000–52,000 units in 2025, dominated by German brands, highlighting that the segment is growing even without aggressive pricing benefits. Most European OEMs are selling cars which are Completely knocked down (CKD) units and subject to much lower import taxation.

 

The proposed India-EU auto agreement meaningfully lowers import duties only for a narrow set of EU completely built up (CBU) and CKD models, largely concentrated in the premium segments. Mass-market EU OEMs remain predominantly localized in India, with price cuts applying for a negligible volume share. 

 

Even with lower duties, importing vehicles from the EU remains expensive compared with locally manufactured cars. Structural constraints such as limited dealer reach, timely availability of parts and higher ownership costs will restrict EU OEM competitiveness, according to analysts at Kotak Institutional Equities. Sharp correction in PV OEMs is an overreaction, the brokerage firm said, adding they remain constructive on M&M and Maruti Suzuki at current market price.

 

According to analysis, mass-market EU OEMs will see price cuts for a handful of models, which should not impact listed OEMs. Luxury OEM prices (after cuts) will remain above ₹50 lakh, where the brokerage firm believe the customer profiles are distinct and there is limited scope for cross-shopping, which should again have negligible impact on OEMs including M&M and Maruti.

 

According to ICICI Securities, the FTA looks more like a long-term structural win than a short-term consumer bonanza. Instead of cheaper cars right away, Indian buyers are more likely to see a wider choice of high-end models, newer technologies, and faster global launches. Carmakers appear keen to protect brand positioning and margins, especially as demand for premium vehicles remains strong. Over time, if localisation improves and duty reductions deepen, price advantages may follow—but for now, the real gain is variety and sophistication, not affordability, the brokerage firm said in a note.    ==================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.