Stellantis (STLA), the French-Italian-American automaker, is one of several European carmakers that could benefit from a potential significant tariff cut being considered by India for cars originating from the European Union region.
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According to Reuters, citing people familiar with the matter, India is looking to axe taxes for EU carmakers from the current levies that are as high as 110% down to 40%. It also plans to trim them even lower to 10% in the future.
The tariff relief is expected to apply to a limited number of vehicles with an import price of over €15,000 ($17,743).
EU Carmakers to Enjoy Tariff Cut for Export to India
The plan is part of the current trade talks being held between India and the EU and comes over a week after Canada also disclosed plans to significantly axe tariffs on Chinese electric vehicles as part of efforts to reset diplomatic ties with China.
India is the third-largest automotive market after the U.S. and China. However, the market has remained hard to penetrate for European and American automakers due to strict policies protecting local producers. The deal could also be a boost for several other European carmakers such as Renault (RNSDF), Mercedes-Benz (MBGAF), Volkswagen (VWAGY), and BMW (BMW).
For Stellantis, it comes at a time when the automaker is planning a U.S. comeback following several years of falling sales and has warned about cutting back on its European investments unless provided relief against Chinese carmakers making inroads into Europe.
Can Stellantis Benefit from the India Tariff Cut?
How much of a change the upcoming tariff relief could bring to Stellantis remains to be seen, as Europe and North America remain its biggest market by volume.
In 2024, Stellantis sold only 100,000 new vehicles across China, India, and the Asia Pacific region, down from 200,000 units the prior year. Moreover, Stellantis currently operates in India through a joint venture.
Meanwhile, as the deal only focuses on European automakers, U.S. players such as Tesla (TSLA), which is battling sluggish sales in India, remain vulnerable to tariff pressure.
Is STLA a Good Stock to Buy?
On Wall Street, Stellantis’ shares continue to hold a Moderate Buy consensus rating from analysts. This is based on eight Buys, nine Holds, and one Sell issued in the last three months.
In addition, the average STLA price target of $11.60 implies about 19% upside from current trading levels.
