How Volkswagens Problems in US is Hurting This Indian Company

Motherson Sumi shares fell as much as 5.3 per cent to hit an intraday low of Rs 268.75 after the auto component maker’s biggest client Volkswagen admitted to fudging emission norms for diesel cars in the US.

Volkswagen has stopped selling diesel cars in the US with immediate effect and the German carmaker can face a potential fine of $18 billion, according to a Reuters report that quoted the US Environmental Protection Agency. 

Of Motherson Sumi’s revenue pie, 40 per cent comes from the Volkswagen group, making it the largest client for the Noida-based company. Out of this 10 per cent revenues come from the US market.

Fears of car sales in US hitting a roadblock could spill over to other markets as well, analysts said. Motherson Sumi can face slowdown in order flows post this development as it provides auto components for Volkswagen, Audi and other Volkswagen group companies, they added

As of 12:35 p.m., shares of Motherson Sumi traded 4.88 per cent lower at Rs 270, underperforming the Nifty which was down 0.35 per cent. While, Volkswagen shares fell 14 per cent to euro 138.70 in the opening deals on the German bourses.