Why the rare earth shortage is a crisis on steroids for Indian carmakers

Carmakers are no saints. Like most companies in most industries, carmakers too try to maximise returns for their stakeholders, until they can’t. Sometimes they take it a bit far, and at other times refuse to go far enough.

In a brazen instance of not going far enough, it needed no less an authority than the Supreme Court, in 1999, to tell carmakers to clean up their act. That order, to upgrade emission control systems, made the industry switch from the clunky carburettor to multi-point fuel injection (MPFI). MPFI offered better performance and lower emission. In contrast, the carburettor was a mechanical device whose mixing of air and fuel was inefficient and imprecise, but it was cheaper.

There have been other occasions where carmakers had to be compelled to upgrade, at times to reduce emission and at other times to enhance safety. However, carmakers have also been pushed around more than once because the norms changed drastically and unexpectedly. And there were times when regulations were meant to change but did not.

For the longest time, Maruti Suzuki stayed away from the diesel segment. It tried a diesel version of the popular Zen in the late 1990s by fitting it with a Peugeot engine. But that was a minor experiment. For the first few years of this century, Maruti waited for petrol and diesel prices to achieve parity, as indicated by lawmakers, only to see Tata, Hyundai and Mahindra lord it over a burgeoning diesel segment.

Maruti finally made its entry into the segment with the diesel Swift in 2007, deploying the now-legendary 1.3-litre engine from Fiat, and met with swift success. Thus enthused, it decided to end its dependence on Fiat for diesel engines, which entailed high licence fees, and developed a 1.5-litre turbo diesel that made its first appearance in the Ciaz in March 2019.