Shares of Samvardhana Motherson International Ltd. (SMIL) gained nearly 2% on Thursday, October 23, 2025, despite concerns raised by its key clients, Volkswagen AG and BMW, about potential production disruptions and weakening market conditions. The rally comes as investors remain confident in the company’s long-term strategy and diversified client base.
Volkswagen Flags Production Concerns
Volkswagen, which contributed around 9% of Samvardhana Motherson’s revenue in FY2025, highlighted potential production stoppages in Europe due to ongoing supply chain issues linked to the Chinese-owned chipmaker Nexperia.
The warning stems from the Dutch government taking control of Nexperia, citing national security and intellectual property risks, followed by China restricting semiconductor exports from Nexperia’s plants. While production has not yet been impacted, Volkswagen cautioned that short-term disruptions could occur, potentially affecting models such as the Golf and Tiguan at the Wolfsburg plant.
Despite the warning, Volkswagen’s spokesperson emphasized that these reports are speculative and production adjustments currently relate only to inventory management. Shares of Volkswagen in Europe ended over 2% lower in regular trading on Wednesday, reflecting the market’s caution.
BMW Issues Profit Warning
In addition to Volkswagen, BMW, another major client of Samvardhana Motherson contributing around 5% of revenue, issued a profit warning earlier in October 2025. The German automaker reduced its volume expectations for the Chinese market and adjusted its automotive EBIT margin guidance to 5-6% for 2025, down from the previous 5-7% forecast.
BMW also lowered its automotive free cash flow projection from over €5 billion to over €2.5 billion. The revision is attributed to weaker sales in China, increased tariff costs, and dealer support payments, along with postponed reimbursements of customs duties from the US and German authorities to 2026.
Samvardhana Motherson’s Response
Despite these challenges, Samvardhana Motherson shares rose 1.87%, trading at ₹107.34 per share at around 9:30 am on Thursday. The stock has gained only 3.6% in 2025, and has fallen nearly 4.2% in the last month, reflecting the volatility in global auto supply chains.
The company has proactively mandated that no single client should contribute more than 10% of total revenue, as part of its latest five-year strategic plan unveiled in September 2025. This diversification strategy reassures investors that the company is less dependent on any single client, mitigating risks posed by potential disruptions in Volkswagen or BMW production.
Market Takeaways
While European automakers like Volkswagen and BMW face challenges from chip shortages and weakening demand, Samvardhana Motherson’s diversified approach has helped the stock remain resilient. The company continues to benefit from its strong global client base, engineering expertise, and strategic risk management initiatives.
Analysts note that while short-term volatility may persist due to client concerns and global supply chain uncertainties, Samvardhana Motherson’s long-term fundamentals remain robust, positioning it well to weather industry-specific disruptions.