Tata Motors shares surge 3.4% amid hopes of US-UK trade deal boosting JLR

Shares of Tata Motors , the owner of British luxury carmaker Jaguar Land Rover, rose 3.4% on Thursday amid reports of a possible trade deal between the United States and the United Kingdom.

The US is expected to announce a trade deal with the UK today, The New York Times reported.

For JLR, the US is a key market, contributing nearly a third to global volumes of the luxury carmaker. JLR itself accounts for nearly two-thirds of Tata Motors' revenues.

Reacting to the development, shares of Tata Motors opened at ₹700.15 against their previous closing price of ₹680.50. The stock gained 3.45% in intraday trade to hit a high of ₹704 on the BSE.

This comes weeks after JLR paused shipments to the US in April amid US President Donald Trump’s 25% tariffs on automobiles. All JLR cars sold in the US are imported from either the UK or the European Union.

A potential trade deal between the US and the UK is not the only tailwind for the stock. The India-UK free trade agreement is also expected to benefit Tata Motors’ British brand JLR in India. As part of the deal, import duties on a fixed quota of completely built unit (CBU) cars will be slashed from 100% to 10%, aiding British luxury car brands over German automakers.

Still, the US remains the key market for Tata Motors’ JLR. In the first eleven months of the 2024-25 financial year, JLR saw a 39% year-on-year sales increase in the US, with its market share among the top four premium automakers (Audi, BMW, Mercedes, and JLR) rising from 8.4% in FY24 to 10.9%, according to HSBC Research.

However, in Europe, including the UK, JLR's sales dropped by 2% during the same period, primarily due to weaker market demand, the brokerage noted. It also forecast that industry growth would remain sluggish due to evolving market regulations, increased competition from Chinese manufacturers and a generally softer demand environment, and JLR’s sales would likely grow in line with the overall industry.

Regarding incentives, Land Rover’s discounts fell by 9% in January, aligning with the broader competitive trend, while Jaguar’s discounts rose by 11%, driven by the phase-out of older models. Overall, average incentives for JLR vehicles in the US decreased by 6% to $4,074 per car in the third quarter of FY25, as discounts on the Defender and Discovery models went down.