Maruti Suzuki, Tata Motors PV, M&M shares fall up to 32% in 2026 despite record sales and GST cut; Here’s why

Domestic car manufacturers like Maruti Suzuki, M&M and others have seen a significant fall in their stock prices this year despite multiple positive tailwinds for the auto industry in last one year.

Under GST 2.0 reform introduced in September 2025, taxes on small cars and compact SUVs were reduced from 28% + cess to a flat 18%, which reduced the ex-showroom prices by 10% to 13%. Meanwhile, GST on large cars and SUVs consolidated to a flat 40% with compensation cess removed.

GST rate cut triggered an immediate volume boost for the auto industry, which has been ongoing for the last one year. In fact, in September 2026, leading automakers registered double-digit wholesale dispatches compared to last year.

*Calculated based on October 8, 2026 closing

Despite GST rate cuts and record sales volumes, shares of leading automakers have not lived up to investors' expectations and are down between 16% and 32% so far in 2026. Here are key factors why auto stocks have fallen sharply in 2026:

Rising raw material prices impacting margins and eating into GST benefit

In the past one year, leading automakers have been facing higher raw material costs. Prices of key commodities like aluminium, steel, copper, rubber, batteries and energy have witnessed high volatility in recent months due to the West Asia conflict. US-Iran war has disrupted the global supply chain, leading to higher energy and logistics costs for automakers.

Higher commodity prices have squeezed automakers' profitability and led to multiple price hikes. Maruti Suzuki and Tata Motors implemented 3 price hikes in 2026, while M&M implemented 2.

For instance, Maruti Suzuki sold 6.83 lakh vehicles in Q1FY27, up 29.3% YoY compared to the same quarter last year. Its revenue rose 35.9% YoY to ₹52,470 crore in the same quarter. However, its net profit declined 10.8% YoY to ₹3,352 crore. EBITDA margin fell from 12% to 8.2% as escalating commodity prices impacted margins and profitability.

Maruti Suzuki lost market share

Several companies are also facing business-level issues and high competition, because of which investors are turning away from them. For example, Maruti Suzuki, which was once a leading automaker with a market share of above 50%, has seen a sharp drop in its market share to 39.2% in FY26, hitting a 13-year low as consumer preference shifted rapidly to SUVs and utility vehicles, where Maruti's market share has remained lower despite new model rollouts like the Victoris.

Over the years, Maruti Suzuki strong hold has been in entry-level and small hatchback cars (Wagon R, Swift, Baleno). But in recent years, sales volumes in this segment have slowed down as nearly two out of every three new cars sold are SUVs and utility vehicles, which are dominated by Mahindra & Mahindra and Tata Motors.

Besides this, Maruti Suzuki’s delayed entry in the Electric Vehicle (EV) segment compared to rivals like Tata Motors and Mahindra & Mahindra has also impacted investors' sentiment towards the company’s future growth prospects.

JLR weakness impacts Tata Motors PV shares

Tata Motors PV (TMPV) shares have seen a considerable fall in 2026 as Jaguar Land Rover (JLR), which accounts for roughly 80% of TMPV's consolidated revenue and most of its profit, is witnessing a slowdown in sales. A production halt due to a cyberattack, supply-chain constraints and the Middle East war has impacted the JLR business.

In Q1FY27, Tata Motors PV reported an 80.3% YoY drop in consolidated net profit to ₹775 crore, while its revenue grew 9.2% to ₹95,799 crore amid JLR business weakness and high commodity prices impacting margins.

Profit booking after high returns in the last few years

Except for Tata Motors PV, other auto stocks have witnessed a sharp surge in stock prices in the past few years. Mahindra & Mahindra shares jumped 73.8% in calendar year 2024 and 23.3% in 2025. Meanwhile, Maruti Suzuki shares gained 53.7% in 2025.

Experts believe auto stocks are witnessing profit booking and corrections in 2026, pulling back from the all-time highs they reached following a massive multi-year rally in 2024 and 2025.

Overall, the GST cut has boosted affordability and demand for the auto industry, but currently investors are focusing more on sustainable profit growth in a high commodity price environment. Besides this, competition within the industry, EV investments and market-share shifts are also other key challenges for automakers.