Production could come to a halt by mid-July if China magnet curbs continue: Automakers
Representative Image (AI-generated)
NEW DELHI: Raising an alarm over challenges in procuring rare earth magnets from China, the auto industry has told the govt that the matter will lead to the stoppage of production of certain models from this week, while heading to a complete shutdown by the middle of next month.
This threatens the impending launch of many new models, apart from disturbing the entire value chain across passenger vehicles, two-wheelers, and commercial vehicles. Companies at risk of production disruptions include top makers such as
Maruti Suzuki
, Mahindra & Mahindra, Hyundai and Kia, Hero Moto, TVS, and Bajaj Auto.
When asked how many weeks of inventory Maruti has before production would be impacted, the automaker said it submitted an import application and it would be difficult to give "very specific details" until it receives a response.
"It is not a restriction. It is an endorsement of end use. In case there is an issue, we will inform all our stakeholders, including the stock exchange," Rahul Bharti, Senior Executive Director, Corporate Affairs, said.
Bajaj Auto said late last week that the issue could have a "serious impact" on their EV production by July. The industry's warning comes even as delegations of industry body Siam (Society of Indian Automobile Manufacturers) as well as component makers ACMA (Automotive Component Manufacturers Association) plan to visit China 'at the earliest' to expedite permissions to procure the magnets used across automotive applications, both in internal combustion engines and electric vehicles.
H
eavy industries minister, HD Kumaraswamy, on Monday said the govt is preparing to send a delegation of industry executives to China in 2-3 weeks to discuss the issue. The govt is working overtime to work out a solution to the issue which began after the Chinese govt, on April 4, imposed certain requirements in the export permit system for medium and heavy rare earth metals, its alloys, magnets, and related products.
The rare earth magnets are used for components like speedometers, electric motors, e-axles, electric water pumps, automatic transmission kits, speakers, sensors, and ignition coils in engines. Companies say a circuitous approval process has to be followed before the magnets can be procured, and a final approval from China's Ministry of Commerce is also required.
Over the past month, auto companies discussed the matter with various govt departments to get clarity regarding the process to be adopted for obtaining the EUC. On suggestions of the Ministry of External Affairs (MEA), they also had a discussion with the Embassy of China in India. However, there has been no solution so far.
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