Weekly News Wrap: Magnet Shortage Hits Output And Launch Plans

India’s auto sector witnessed a week of high activity, marked by fresh product plans, shifting competitive dynamics, uncertainty around rare earth supply, and notable policy developments.

Hero MotoCorp moved aggressively to defend its turf in the 125cc motorcycle segment and expand the Harley-Davidson lineup, while Bajaj Auto and Ather Energy scrambled to manage production challenges triggered by China’s rare earth magnet supply squeeze.

On the four-wheeler front, Hyundai unveiled an ambitious multi-year product roadmap–including potential entry of its luxury Genesis brand–while Maruti Suzuki’s chairman once again sounded the alarm on sluggish passenger vehicle sales. Tata Motors navigated multiple fronts from safeguarding EV production against critical mineral risks to stabilising its small commercial vehicle segment–while its JLR luxury arm remained firm on profitability targets despite tariff headwinds.

The policy environment also saw movement, with the extension of the PM E-Drive scheme, fresh discussions on tractor emission norms, and a push to curb Chinese imports in the construction equipment space. Meanwhile, the EV transition narrative stayed strong, led by record electric three-wheeler sales, NITI Aayog’s caution on adoption pace, and thought leadership on carbon monetisation and connected low-speed EVs.

Here’s the detailed round-up of all major developments this week:

Hero MotoCorp to Strengthen 125cc Portfolio With two Launches in Q2’FY26

Following the launch of the new CB125 Hornet by Honda in July, Hero MotoCorp is gearing up to launch two new products in the 125cc motorcycle category ahead of the peak festival season as India’s largest two-wheeler maker looks to fend off the competition from its rival–Honda Motorcycle and Scooter India.

This comes at a time when Honda overtook Hero in retail sales in India for the month of July. “In the deluxe 125cc segment, we are strategically poised to disrupt the market with the forthcoming launch of a new 125cc with best-in-class technology features and style, and a refreshed 4D 125cc variant. Both are designed to offer compelling value and enhance our competitive edge,” Hero MotoCorp’s management told investors.

Hero MotoCorp’s 125cc motorcycle portfolio currently consists of four models – Xtreme 125cc R, Glamour, Super Splendor XTec and Glamour XTech.

Hero Motocorp To Expand Harley-Davidson Lineup In Q2’FY26

Hero MotoCorp, which has a partnership with US-based premium motorcycle maker Harley-Davidson Motor to co-develop and manufacture motorcycles in India, plans to expand the Harley lineup with a new model on the 440 platform in the current July-September quarter.

“We are expanding the Harley lineup with new additions in this space, which will continue to excite the customers. There is a new product from the HD 440 portfolio, which you will see in the second quarter, and going forward, there will be exciting products that will come from the HD portfolio,” Hero MotoCorp’s management told investors.

Bajaj Auto Recalibrates New Chetak Launch Plans Amid Magnet Supply Issue

Bajaj Auto, which had earlier announced its plans to launch a new entry-level Chetak electric scooter in June, is recalibrating the launch of the model amid the shortage of rare earth magnet supply from China.

In May, the automaker said it is planning to launch a new model of Chetak electric scooter that will cater to the entry-level segment as part of the company’s broader strategy to strengthen its position in the rapidly growing electric mobility market. However, on Wednesday, Bajaj Auto’s Executive Director Rakesh Sharma said the company is focusing on restoring the production of existing models, which has been disrupted by the shortage of heavy rare earth magnet supply from China, before bringing new products.

Baja Auto had to reduce the production of its electric two-wheelers by as much as 50% in July and anticipates a similar production cut for August and September because of the heavy rare earth magnet supply crunch.

Bajaj Auto Sees 40-50% Cut in Q2 e2W Production Due to Magnet Shortage

The ongoing supply crisis for heavy rare earth magnets from China is impacting Bajaj Auto, which has already cut its electric two-wheeler production by as much as 50% in July. The company anticipates a similar production reduction for August and September, according to a senior company official.

“Our impairment of production started towards the end of June. In July, the production was affected to the extent of 50%. We were expecting the output to be zero in August, but it is not going to be so. August production will be better than July production, though we will still be at about 50-60% of the plan,” Bajaj Auto’s Executive Director Rakesh Sharma said.

Rare-earth magnets play a critical role in the automotive industry. These magnets are important, particularly for EVs, due to their higher performance in small form factors, enhanced energy efficiency and critical functionality in both powertrains and digital systems.

China produces 60% of the world’s rare earth elements and controls around 90% of the global refining capacity. China’s suspension of magnet supplies since April has put automakers on high alert, as they scramble to secure supplies and keep production running.

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