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Investing.com -- Germany’s automobile industry could face production delays and potential outages due to China’s export restrictions on rare earths alloys, mixtures, and magnets, according to a warning issued by the German auto lobby, VDA. The lobby’s head, Hildegard Mueller, highlighted the severity of the issue in a statement on Tuesday, citing slow export license approvals and customs clearance delays as the primary causes of the problem.
This is the first time VDA has warned of a potential halt in production due to these issues. The slow granting of export licenses and lags in customs clearances for exports with valid licenses are causing significant issues for automakers.
In response to the new rules imposed by China in April, which require exporters to obtain licenses from Beijing, diplomats, automakers, and executives from India, Japan, and Europe are urgently seeking meetings with Beijing officials. Their goal is to push for a faster approval process for rare earth magnet exports.
Mueller stressed the urgency of the situation, stating that while some licenses have been granted, it is currently insufficient to ensure smooth production. If the situation does not change quickly, she warned, production delays and even production outages could become a reality.
The shortage poses a significant threat to the already strained supply chains of automakers such as Volkswagen (ETR:VOWG_p), Mercedes-Benz (OTC:MBGAF), and BMW (ETR:BMWG), as well as suppliers like Bosch (NSE:BOSH). These companies, among others, rely on rare earths for applications, including motors for electric cars.