Bajaj Auto, Hero MotoCorp Share Price Slide Over 2% Amid Rare Earth Supply Concerns

Market Performance

On June 20, the share prices of Bajaj Auto and Hero MotoCorp saw a notable decline, falling over 2% each in early trade.

• Bajaj Auto dropped 2.2%
• Hero MotoCorp slipped 2.4%

Despite the individual declines, the Nifty Auto Index was trading almost 1% higher, showing resilience in the broader automotive sector.

Main News

The sharp decline in Bajaj Auto and Hero MotoCorp share prices follows a significant disruption in the supply of rare earth magnets from China.

• China's exports of rare earth permanent magnets fell to just 1,238 metric tons in May 2025
• This marks a 53% decline compared to April 2025
• Compared to May 2024, the fall was even steeper at 74%
• These figures represent the lowest monthly export volume since February 2020

Rare-earth magnets play a crucial role in the manufacturing of electric vehicles and other high-tech equipment. The sudden decline in exports has sparked concerns about production delays for Indian automakers that rely on these components.

Company Details

Bajaj Auto

In its Q4 earnings call, Bajaj Auto highlighted the ongoing rare earth crisis as a "dark cloud on the horizon." The company warned that if supply disruptions continue, it could halt production as early as July 2025.

Hero MotoCorp

While Hero MotoCorp has not issued a direct statement, the company's stock reacted sharply to broader industry concerns about supply chain stability.

Government Response

Commerce Minister Piyush Goyal stated that the Indian government is actively pursuing multiple avenues to resolve the situation:

• Engaging in diplomatic talks with Chinese authorities
• Exploring new global supply chains
• Active involvement from the Commerce Ministry and the Indian embassy in China

Global Trade Impact

Between January and May 2025, China's total exports of rare earth magnets stood at 19,132 tons, representing a 14.5% decline compared to the same period last year.

This drop marks the lowest five-month export total since 2021, further intensifying global concerns.

Summary

The share prices of Bajaj Auto and Hero MotoCorp declined on June 20, reflecting growing investor anxiety over supply chain vulnerabilities caused by China's restrictions on rare earth exports. With a 74% year-over-year (YoY) decline in May shipments and signs of continued tightening from Beijing, automakers in India and across the globe may face significant operational headwinds in the near term.