Chip shortage, rising input costs: Auto stocks may remain underperformers

To counter the rise in input costs, Maruti plans to hike prices across-the-board from September, making it the fourth such increase this year

Auto stocks are likely to continue with their underperformance going ahead, as most companies from the sector grapple with multiple headwinds that include semiconductor shortage, rising input costs and competition from the electric vehicle (EV) segment.

“The auto sector is facing multiple headwinds such as high raw material prices, chip shortages etc. The traditional four-and two-wheeler segment also faces competition from the electric vehicle (EV) segment. Though valuations are attractive, auto stocks will continue to remain under pressure. It is a long road to recovery for them,” said A K Prabhakar, head of research at IDBI Capital.

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