Top Auto Sector Stocks in India

What are Auto Sector Stocks?

Auto sector stocks are stocks of companies involved in manufacturing, distribution or supporting vehicles, two-wheelers, passenger cars, commercial vehicles and auto components.

About the Best Auto Stocks in India

1. Maruti Suzuki India Ltd: Maruti Suzuki makes hatchbacks, sedans, SUVs at Gurgaon, Manesar, Gujarat, Kharkhoda with 2.35 mn units annual capacity as India’s largest carmaker.
2. Mahindra and Mahindra Ltd: Mahindra operates in automotive, agriculture, and aerospace sectors, makes SUVs, tractors, commercial vehicles with presence in 100+ countries, employs 2,56,000 people, and generates USD 19.4 bn revenue.
3. Tata Motors Ltd: Tata Motors makes passenger cars, commercial vehicles, buses at six plants in Jamshedpur, Pune, Lucknow, Pantnagar, Dharwad, Sanand and serves domestic and international markets.
4. Bajaj Auto Ltd: Bajaj Auto makes motorcycles, scooters, and three-wheelers with brands like Pulsar, Discover, Platina, RE at three plants with five-million-unit annual capacity and exports to 79 countries.
5. Hyundai Motor India Ltd: Hyundai Motor India makes passenger vehicles, engines, and transmissions at Chennai plant with 6,00,000 units annual capacity, has 1,366 sales points, 1,550 service points in India and exports globally.

How to Invest in Auto Stocks in India?

Here is how you can invest in auto stocks:

1. Open a demat/trading/stockbroker account. You can open a demat account with smallcase!
2. Conduct thorough research into the top auto stocks in India using Tickertape Stocks Screener. The screener offers over 200 built-in filters, allowing investors to select parameters and generate a list of auto stocks.
3. Place a ‘Buy’ Order on the top auto stocks that align with your investment thesis.

Types of Auto Stocks Listed in NSE

• Automakers: The backbone of the automotive industry, consisting of companies that manufacture a wide range of vehicles, including cars, trucks, buses, SUVs, and Electric Vehicles (EVs). Automakers like Tata Motors manufacture cars, SUVs, trucks, and EVs.
• Suppliers: Suppliers behind the best automobile stocks in India provide essential parts, including seats, tyres, and batteries, to major automakers. They also supply more advanced technology, such as electronic systems that enhance vehicle performance and safety. Suppliers like Motherson Sumi, Bosch, and Bharat Forge provide key components to automakers.
• Auto Parts Retailers: Specialised in selling auto parts and accessories to consumers and professional mechanics. These top auto stocks in India range from large chains to smaller, local shops, offering a wide variety of parts for repair and maintenance. Retailers like Minda Industries, Varroc, and Endurance Tech supply parts and accessories for repairs.
• Auto Dealers: Auto dealers operate showrooms and lots where consumers can buy new and used vehicles. They play a crucial role in the automobile market, facilitating the connection between manufacturers and end consumers. Dealers such as Maruti Suzuki, and Tata Motors sell new and used vehicles.

Features of Automobile Sector Stocks

Benefits of Investing in Automobile Stocks

• Government Support: FAME-II for EVs and PLI for auto components can provide incentives. This support makes the industry more competitive and its growth outlook better.
• Export Growth: India has become a global hub for automobile exports, especially two-wheelers and small cars. Hence, this provides additional revenue streams for top auto companies beyond domestic market.
• Technology: Investments in EVs, connected mobility, and green technologies help auto companies align with changing consumer preferences and environmental goals, making them attractive among automotive sector shares.
• Cyclical Upside: Auto demand rises with broader economic growth, so investors in this sector indirectly benefit from India’s consumption trend, often visible in top auto sector stocks.
• Employment and Ecosystem: The auto sector drives manufacturing, logistics, and ancillary industries. An auto sector stock list often reflects the strength of this ecosystem and its long-term relevance.

Risks Associated with Investing in Automobile Stocks

• Economic Volatility: Auto sales are economically sensitive as slowdowns, inflation, or interest rate hikes may affect the demand.
• Fuel Price Fluctuation: Fuel price changes may directly impact consumer buying decision. Higher fuel prices may limit demand in two-wheeler and passenger car segments.
• Regulatory Hurdles: Stricter emission and safety norms require heavy R&D and compliance expenditure, which further adds to the cost for many automobile stocks.
• Raw Material Cost: Prices of steel, aluminium, and semiconductors are volatile. Rising costs may increase production expenses and reduce the profitability of top auto stocks.

Factors to Consider Before Investing in Automobile Stocks

• Market Share: Companies with growing market share in the auto space are resilient to demand shifts. A strong market presence means consumer trust and better brand positioning.
• Product Portfolio: A mix of two-wheelers, EVs and passenger cars in auto stocks may reduce risk from cyclicality in a single product segment.
• Export Potential: Automobile industry shares with strong global exposure may benefit from diversification. Global demand helps reduce dependence on the domestic market during slowdowns.
• Financials: Since auto is a capital-intensive business, investors need to review revenue growth, margins, and debt levels to understand the overall auto stocks performance.
• Policy Alignment: Leading car company stocks aligned with government policies on localisation, green mobility, and EV adoption may sustain long-term growth.