In a major jolt to the global automobile industry, Suzuki Motor has temporarily halted production of its widely popular Swift hatchback, a flagship model in India, Japan, and several other global markets. The reason? A tightening grip from China on the supply of critical rare earth elements, which has begun disrupting key industrial sectors across the world.

This marks the first time a Japanese automaker has been forced to suspend vehicle production as a direct consequence of China’s rare earth export restrictions, industry sources told Reuters. Production of all Swift subcompact variants, except the Swift Sport, has been on hold since May 26.

While Suzuki had initially hoped to resume assembly by June 6, supply issues persisted, delaying production restart plans. The company has now announced a tentative partial resumption from June 13, with full-scale operations expected to restart after June 16.

Although Suzuki has officially cited “component shortages” without elaborating, two insiders familiar with the matter confirmed to Reuters that the root cause lies in China’s decision to curb exports of rare earths and magnets that are critical materials used in electric motors, batteries, and automotive components.

Rare earth materials such as neodymium and dysprosium are essential in manufacturing magnets for electric motors and various car components. China dominates the global supply, accounting for more than 70% of rare earth production. When China announced in April that it would suspend exports of several categories of rare earths and associated magnets, alarm bells rang across sectors, from automobiles to aerospace and semiconductors to military hardware.

This rare earth chokehold is not just a threat on paper. Several European auto parts plants have already paused operations. Mercedes-Benz is reportedly exploring strategies to shield itself from the looming shortfall. The disruption is also expected to impact the electric vehicle (EV) market, as lithium-ion battery production is heavily dependent on these elements. The ripple effect may slow down EV rollouts and affect pricing globally, including in India, where the EV market is still emerging and vulnerable to global supply tremors.

The consequences are particularly stark for India, where the Swift has been one of the best-selling compact cars for over a decade. Suzuki’s decision could cause supply gaps in India’s market as well, especially if disruptions continue longer than expected. Meanwhile, auto manufacturers in India are reportedly scouting for alternatives to lithium-ion batteries and rare earth-dependent components.

Japan, already reeling under the pressure, is now reportedly planning to propose stronger cooperation with the United States on building a secure rare earth supply chain. According to Nikkei Business Daily, these proposals are expected to feature prominently in upcoming trade talks between the two allies.

While Suzuki’s temporary suspension may appear limited in scope, analysts say it underscores a far more worrying trend; China’s dominance over rare earth supplies is becoming a geopolitical lever capable of stalling industries across continents.