By Victoria Waldersee
BERLIN (Reuters) -Germany’s auto lobby warned China’s export restrictions on rare earths, used in everything from windshield-wiper motors to anti-lock braking sensors, could soon cause production outages, the latest industry group to sound the alarm over delays to supply.
Slow granting of export licenses, as well as delays in customs clearance of exports with valid licenses, meant suppliers could not produce critical components required to keep car production running smoothly, the head of auto lobby VDA, Hildegard Mueller, said in a statement to Reuters.
That marked the first time the lobby has warned of an impending stop to output.
Diplomats, automakers and other executives from India, Japan and Europe are urgently seeking meetings with Beijing officials to push for faster approval of rare earth magnet exports, sources told Reuters earlier on Tuesday, after China imposed new rules in April demanding exporters obtain licenses from Beijing.
Beijing is widely seen as using the controls as a key source of diplomatic leverage because there are almost no alternatives outside China.
Trade groups in the U.S. and India representing automakers including General Motors, Toyota, Volkswagen, Hyundai and others have also warned that factories may shutter within weeks if suppliers remained unable to produce critical components which required rare earths, from transmissions to sensors to cameras.
China has issued some permits to a handful of rare earth producers, including suppliers to Volkswagen – but not enough to ensure smooth production, the VDA’s Mueller said.
German auto parts maker Bosch said last week that suppliers have been bogged down by China’s more-rigorous procedures granting export licenses.
“If the situation is not changed quickly, production delays and even production outages can no longer be ruled out,” Mueller said.
(Reporting by Victoria WalderseeEditing by Ludwig Burger and Tomasz Janowski)
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