Maruti says engineers working to mitigate rare earth magnet shortage issue

Maruti Suzuki India on Thursday said its engineers are working to mitigate the rare earth magnet shortage issue, noting that there has been no impact on its production so far.

In an analyst call post the company's June quarter financial results, Maruti Suzuki India Senior Executive Officer Corporate Affairs Rahul Bharti termed the shortage a challenging situation.

"So, it is a challenge, and of course, our engineers are working to mitigate it and ensure that we do not have the impact of this.

"So, it's work in progress, but as of now, we are managing the situation. If and when there is an impact, we'll come back to you to answer your question," Bharti replied to a query on the matter.

The recent imposition of export restrictions by China on key rare earth magnets has resulted in supply chain bottlenecks, impacting the user industries, including the auto and electronics sectors.

China currently dominates the global rare earth magnet supply chain, controlling over 90 per cent of global processing capacity.

These magnets are essential components across sectors like automobiles, household appliances, and renewable energy.

The Chinese government has mandated, from April 4 onwards, that special export licences be required for seven rare earth elements and associated magnets.

On demand scenario in the domestic market, Bharti said: "At the beginning of the year, the industry body had given a kind of a guess of 1-2 per cent growth this fiscal. Q1 has not been up to the mark. Q2 has some positives".

He noted that the company is expecting the situation to improve in the festive season.

"There are other positives also, like the monsoon and rural (sales) are holding up. So, we are looking at the second quarter and the festive season with optimism," Bharti stated.

Replying to a query on the upcoming Corporate Average Fuel Efficiency (CAFE)-3 norms, he said the discussions have been proceeding well between industry and government with both sides understanding each other's position quite well.

"It is a complex topic, but there have been sufficient discussions and all the complexibilities are on the table, and it is expected that between one to two months, all of us are hoping that the final revelation will be out, so that we have clarity for for the powertrains starting from first April 2027," Bharti stated.