Bajaj Auto flags threat of production cuts by July if rare-earth magnet issue remains unresolved
Chinese restrictions on key rare-earth magnets posed an existential threat to the electric vehicle (EV) business, Rakesh Sharma, executive director at Bajaj Auto, said during a media briefing after the results.
Worryingly for investors, Bajaj's management said that the launch timeline for the country's fourth-largest two-wheeler player's upcoming electric variants will also be impacted if the situation is not resolved.
'There is no short-term solution. Alternatives exist, but they will take time to develop," Sharma said.
Last month, China started asking for end-user certificates to clear exports of rare-earth magnets, which are required in electric motors and other components used in EVs.
Also Read: Ola Electric's Q4 results will be Bhavish Aggarwal's chance to set the record straight
Mint earlier reported that automakers have petitioned the Prime Minister's Office, ministry of heavy industries, and the commerce ministry to raise the issue of rare earth magnets.
The industry has highlighted to the government that there can be a serious threat to production lines at automobile factories if the situation is not resolved, as per three people in the know.
'Stocks are fast depleting. So far, 30 applications have been submitted to China, but none have received final approval. The Chinese government has said that final approvals will take about 45 days," Sharma said during the call.
China almost entirely controls the global supply of rare earth magnets, crucial to making efficient motors.
The licences are now being issued only after the companies are able to submit an array of documents, including photographs of the product where the magnets will be used and an undertaking that the product will not be used for any military application.
Also Read: Nissan's global layoffs to skip India as it lines up new SUVs
China's commerce ministry issues a certificate, which is valid for six months, after all documents are submitted.
FY25 results strong; exports, margins rise
Sharma made the comments after the release of the company's January-March and FY2025 results.
The company's revenue jumped by 12% to ₹50,010 crore during the financial year due to a 7% growth in total two-wheeler and commercial vehicle sales to 4.6 million units.
The company's earnings before interest taxes depreciation and amortization increased by 40 basis points to 20.2%, resulting in a 9% growth in net profit to ₹8,151 crore.
During the January to March period, revenue jumped 6% to ₹12,148 crore, while net profit increased by 6% to ₹2,049 crore.
'Export performance in our key markets like Latin America was good. KTM's share in our exports was nearly nil in the quarter," Sharma said.
Also Read: New Delhi is promoting hybrid cars on par with electric, upsetting EV makers
Bajaj's exports during the last financial year jumped by 14% to 1.8 million two-wheelers and commercial vehicles, which helped it expand margins and post growth in the market.
Going forward, the management expects that electric vehicles will continue to grow in double digits, while the more expensive 125cc motorcycle segment's growth will be double the industry average.
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