Auto companies extend losses on NGT order; Tata Motors, M&M plunge over 4% and 2%

Tata Motors dipped as much as 4.6 per cent, adding to Friday’s loss of 2.99 per cent to hit its lowest since October 15. (Photo: Reuters)

Stocks of auto companies continued to fall on Monday following the National Green Tribunal’s (NGT) Friday order that said that diesel-run vehicles will not be registered in Delhi and there will be no renewal of registration of such vehicles which are more than 10-year-old.

The auto industry has termed the NGT order banning the registration of diesel vehicles in the Capital as “ridiculous” and said the “knee jerk” reaction of the tribunal would not help in the reduction of air pollution.

Reacting to news, auto companies that fell on Friday too, extended their losses. Tata Motors dipped as much as 4.6 per cent, adding to Friday’s loss of 2.99 per cent to hit its lowest since October 15.

Mahindra and Mahindra plunged as much as 2.65 per cent, adding to Friday’s loss of 2.31 per cent, dipping to lowest intra-day level since Nov 9.

The Society of Indian Automobile Manufacturers Association SIAM) will meet and decide on NGT order. “We definitely do not agree with the NGT order at all. This is not based on any scientific fact or study,” SIAM Director General Vishnu Mathur said.

Delhi constitutes about 7% of the passenger vehicle sales and about 25% of the passenger vehicles are diesel driven.

Brokerage house Angel Broking said, “We believe the NGT order is negative for passenger vehicle players such as M&M and Maruti as the ban on diesel would impact the sales. However, commercial vehicles are likely to be less impacted by the order as the number of registrations in Delhi are relatively lower (as per our estimates CV
sales in Delhi are about 5%).”

It further said that the impact of this ban on the auto industry is negligible as these are only interim measures with the next hearing scheduled on January 6, 2016.

Further, the passenger vehicle consumers have an option to purchase petrol and CNG variants which will limit the impact of the ban. Also, the rule to not renew vehicles more than 10 years could boost the demand for new commercial vehicles.