Suzuki Swift Production In Japan Halted As China Restricts Rare Earth Exports

Suzuki Motor has halted production of its compact car, the Swift, owing to parts shortages caused by Beijing’s restriction on rare earth exports. With China producing over 90 per cent of the world's rare earth minerals—essential for both electric and hybrid vehicles—this suspension marks the first instance where an automotive company has had to suspend its production. 

Production of both mild-hybrid and non-hybrid Swifts has been halted from May 26 to June 6. The brand will partially commence manufacturing these models at its Sagara plant from June 13, but full production will resume after June 16, as per reports. 

China decided to suspend the export of rare earths and related magnets in April, which led to a disruption of the global supply chain. Additionally, it has also made the procuring of a license for the export of these resources more strenuous, due to which approval ratings for the same have plummeted drastically. The European Association of Automotive Suppliers reported that only 25 per cent of export license applications made by auto components suppliers have been approved til now, since April. 

While India is yet to face the heat, Bajaj Auto’s Executive Director, Rakesh Sharma, recently disclosed at an investors meeting that the Indian automotive sector will face the brunt of this decision soon. Chinese officials usually take 40-45 days to approve an export license application, but none from India has been approved yet. "If shipments don't arrive soon, our July manufacturing will face serious problems," Sharma stated in the meeting. And this applies not just to Bajaj Auto, but potentially the entire Indian auto industry. Making matters worse is that the entire Indian auto industry relies exclusively on Chinese suppliers for these specialised magnets. While we do have deposits, the process to extradite, whilst setting up facilities, will take up a lot of time. 

India is gearing up to send a delegation to China next week with representatives from automotive industry associations to discuss fast-tracking approvals. But the disruption, nonetheless, highlights the vulnerability of the entire auto industry to Chinese forces. This dependency is expected to further increase in the future, as a result of which it gives great leverage to China to exert its soft power.