India Top Carmaker Says Auto Sales Will Be Hurt By Government’s Proposal On Airbags
According to the chairman of Maruti Suzuki, the country’s top-selling auto manufacturer, R.C. Bhargava, India’s decision to make six airbags essential in passenger vehicles will raise car prices and drive away a portion of potential purchasers.
Pushing back publicly on what the government deems a significant safety measure, Bhargava argued that such a move would damage sales of small, low-cost cars and put more pressure on enterprises already facing high prices.
In January, India, which has some of the world’s worst roads, presented a draught proposal mandating six airbags in all passenger cars made after October 1. The draught guidelines, which are part of road safety initiatives, are still in the works.
According to Bhargava, small car sales have been dropping during the pandemic, and these cost increases will only make them fall further, while significant and luxury cars continue to climb.
“This will hurt the growth of the small car market and the smaller and poorer people, who cannot afford the more expensive cars,” he said.
With yearly sales of roughly 3 million units, India is the world’s fifth-largest vehicle market, headed by Maruti Suzuki, majority-owned by Suzuki Motor of Japan, and Hyundai Motor.
The bulk of cars in the country’s price-sensitive market sell for between $10,000 and $15,000.
Airbags for the driver and front passenger are currently required in all vehicles. According to vehicle market data firm JATO Dynamics, adding four more airbags will increase the price by 17,600 rupees ($231).
According to Ravi Bhatia, president of JATO for India, the cost could be higher in some situations since firms will need to make engineering adjustments to the car’s structure to accommodate the additional airbags.
“Companies will need to decide whether it is feasible to make the changes and if the model will sell at a higher price. The damage will be significant at the lower end of the market with huge price sensitivity,” he said.
According to government figures, more than 133,000 persons were killed in 355,000 traffic accidents in India in 2020. Passengers in automobiles accounted for 13% of all fatalities.
According to sources, India’s road transport ministry sticks to its guns and pressures automakers to accept the guidelines.
The ministry thinks that four additional airbags will cost no more than $90, but it will face opposition even then.
“Side and curtain airbags are not mandatory anywhere globally,” according to the Society of Indian Automobile Manufacturers, which has asked the ministry to “examine and reconsider” the guidelines.
The industry lobby organization cautioned the ministry in February that, with the cost of cars gradually rising in recent years, enough time must be given for the airbag requirement “to avoid the danger of damage on industry growth.”
Reports claimed to have gained access to a copy of the letter that has not been made public yet.
The Automotive Component Manufacturers Association (ACMA) has advised the ministry that it can satisfy the increased demand for airbags but that ramping up domestic production will take 12-18 months.
The ministry, SIAM, or ACMA did not immediately return a request for comment.