Bajaj Auto, Hero MotoCorp stock prices down as magnet shortage hits electric scooters production

Supply Chain Jitters Resurface for Indian Auto Majors

Mumbai, June 20, 2025 – Shares of Bajaj Auto and Hero MotoCorp fell sharply by over 2% each in Friday’s trade, rattled by news of a steep decline in China’s rare earth permanent magnet exports. The disruption renewed investor fears of supply chain constraints for electric vehicle (EV) and two-wheeler manufacturers heavily reliant on these critical components.

At around 11:00 a.m., Bajaj Auto was trading 2.2% lower, while Hero MotoCorp dropped 2.4%, even as the Nifty Auto index rose nearly 1%. This indicates broader sectoral resilience despite the specific pressures on these companies.

China’s Exports Hit 5-Year Low

Fresh customs data showed that China’s rare earth magnet exports dropped nearly 53% in May compared to April, totalling just 1,238 metric tons—the lowest monthly figure since February 2020. On a year-on-year basis, May exports plunged by 74%, deepening an already worrying trend. April’s shipments had already halved from March levels.

For January–May 2025, cumulative exports stood at 19,132 tons, marking a 14.5% decline from the previous year and the weakest tally for the five months since 2021.

Automakers on Alert as Beijing Tightens Controls

This sharp fall follows Beijing’s April decision to impose fresh curbs on exporting seven categories of medium-to-heavy rare earth products and certain magnets — materials integral to electric vehicles, wind turbines, semiconductors, and defense systems.

China controls over 90% of global rare earth magnet production, making any restrictions a significant global risk. The impact is being felt acutely in India’s automotive sector, which depends on these magnets for motor assemblies and other critical EV components.

Bajaj Auto Warns of Production Risks

In its recent Q4 earnings call, Bajaj Auto flagged rare earth availability as a “dark cloud on the horizon, ” warning that production could stall as early as July if the situation persists. The company’s management noted that alternative sourcing options remain limited in the near term.

Government Steps In

Commerce Minister Piyush Goyal said the Indian government has reached out through diplomatic channels and is creating new supply chains to limit the consequences. The Indian embassy is in contact with the Chinese, while internal conversations inside the commerce ministry are being undertaken for strategic direction.

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