Daimler Truck says rare earth supply concerns have led to more inventory building

Obstacles to the supply of key raw materials from China have prompted truckmaker Daimler Truck to increase its inventories in the short term, CEO Karin Radstrom told reporters after a conference in Gothenburg on Tuesday.

Radstrom said the chip crisis during the COVID-19 pandemic had already shown that vehicle manufacturing could no longer rely as heavily on just-in-time deliveries.

The German truck manufacturer had since increased its inventory levels, for example of semiconductors, even if this tied up more capital, she said.

"With everything that's going on in the world right now, this seems to be a good and necessary strategy," Radstrom told reporters.

The automotive industry currently fears that the supply of rare earths, which are needed for magnets, will soon dry up due to new export regulations in China. Since April, exporters have had to apply for new export licences, which are only slowly being approved.

China dominates the market for the raw materials, which are used in everything from electric motors to window mechanisms.

Radstrom said the situation is currently a major issue for Daimler's purchasing department, and the company is closely monitoring the issue.

"So far, we seem to be getting what we need," Radstrom added, saying there have been no production outages so far.

(Reporting by Ozan Ergenay, Marie Mannes and Ilona Wissenbach; Editing by Jan Harvey)