VECV CEO flags rare earth supply risk, calls steel duty inflationary

Rare earth magnet supply remains a key concern for VE Commercial Vehicles (VECV), according to Vinod Aggarwal, Managing Director and CEO. Speaking to CNBC-TV18, Aggarwal said the company currently has around two to three months of inventory, but the situation could become difficult if the issue isn’t resolved soon.

“If the problem is not solved in the next 2-3 months, it will be a challenge,” he cautioned, referring to China’s restrictions on rare earth magnet exports that are critical for electric vehicle components.

In addition to supply chain pressures, VECV is also grappling with rising input costs. The new safeguard duty of 12% on steel has led to price hikes, adding to the cost burden already created by the new mandate for air conditioning in truck cabins. Aggarwal said the duty is “proving to be inflationary” and may not be in the best interest of the auto industry.

The company posted a 7% sales growth in May and 16% growth year-to-date, ahead of the industry’s 4-5%. It is also seeing strong momentum in the bus segment, which grew over 30% in the first two months of 2024-25 (FY25).

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Aggarwal sees positive trends in the commercial vehicle market, supported by strong replacement demand, expectations of lower interest rates, and a robust economic outlook. He also highlighted the upcoming tender for over 10,000 electric buses as a major opportunity for future growth.

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For the entire interview, watch the accompanying video

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