Auto stocks plunge as news of Brexit shocks the global economy
At Sensex today, Auto stocks were the worst hit as a result of Britain’s vote to leave the European Union. While most of the major auto companies suffered a fall in their stock prices, Tata motors owned Jaguar Land rover which gets a fair share of its volumes from the EU plummeted as low as 10% through the day.
Britain’s luxury carmaker JLR also sources about 40% of its components from the EU region which is probably why they had already stated that they are estimating a loss of almost 1 billion pounds by 2020 if Britain returned to World Trade Organization rules which would impose a 10% on export taxes and around 4% on imports of components.
Motherson Sumi, auto components manufacturer based at Pune , earns a major share of its revenues from the EU were among the worst affected and its stocks crashed up to 8% as a consequence of Brexit. Automobile giant, Volkswagen in Europe has been their biggest customer and now a lot of uncertainty prevails as to how adverse the impact would be on the companies that have been trading with the UK. Major companies of the automobile sector are curious to know whether other member countries of the EU too would come up with ideas to step out of the EU like Britain, as it would result in more damages to the entire economy.