Maruti Suzuki sees no immediate impact from China's rare earth magnet curbs, others fear major disruption

India's biggest car manufacturer, Maruti Suzuki doesn't see any immediate impact on vehicle production in the country due to China's export curbs on rare earth magnets, which are a key component for making vehicles, especially electric vehicles. Maruti Suzuki also revealed that the auto company is in talks with the Indian government on this matter.

Reuters reported last week that auto manufacturers in the country told the government officials that production could stall within days due to the curbs. Major two-wheeler manufacturers Bajaj Auto and TVS Motor Company have already expressed their concerns about this issue, fearing that a major disruption is looming ahead for the Indian automakers. These companies are worried by the complexity of a new import process requiring approval from Indian and Chinese officials, as well as documents such as end-use certificates stating the magnets are not used for military purposes.

Bajaj and TVS foresee production disruption and price hikes owing to the rare earth magnet supply chain issue. However, the biggest PV manufacturer in the country is not that worried as it seems. Speaking on this, Rahul Bharti, senior executive director, corporate affairs, said that it is not a restriction. "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," he reportedly said. When asked how many weeks of inventory Maruti Suzuki has before production would be impacted, the automaker said it has submitted an import application, and it would be difficult to give very specific details until it receives a response.

One Maruti Suzuki car facing production halt

While Maruti Suzuki has stated that it doesn't see any immediate impact on vehicle production, at least one of its car models is facing production disruption owing to the supply chain issue, suggests the report. It stated that at an industry meeting with the Ministry of Heavy Industries (MHI) last week, Maruti Suzuki reportedly said that it might be forced to stop production of one of its car models in early June if the magnet issue is not resolved soon. However, it is not clear which model the carmaker was pointing at.

China controls more than 90 per cent of global processing capacity for the rare earth magnets, which are used in fields including automobiles and clean energy. The country enacted measures in April requiring companies to obtain import permits for the rare earth magnets. Following that, the Society of Indian Automobile Manufacturers (SIAM) has told government officials that inventories at component manufacturers may run out by the end of May, and starting early in June, auto industry production is expected to come to a grinding halt. The concerns come as carmakers are gearing up to launch new EVs in the country as they grapple with slowing sales of fossil fuel models.

Meanwhile, Bharati has stated that Maruti Suzuki, which plans to launch its first electric car, e-Vitara, this year in India, does not see any material impact on the car's launch timeline because of the magnet issue.

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