India’s plan to make six airbags mandatory in passenger vehicles will make cars more expensive and exclude a section of potential buyers, the chairman of the country’s best-selling carmaker Maruti Suzuki told Reuters.
Such a move would hurt sales of small, low-cost cars and put more pressure on companies already facing high costs, said RC Bhargava, as the government publicly backtracks on a major safety initiative.
India, which has some of the deadliest roads in the world, in January released a draft proposal mandating six air bags in all passenger cars manufactured from October 1, 2022. The draft rules are part of a series of road safety measures that are yet to be finalised. ,
Mr Bhargava said sales of small cars are declining due to the pandemic and such cost escalation will only mean that they will go down further, while larger and more expensive cars continue to rise.
“This will hurt the growth of the small car market and the smaller and poorer people who cannot afford more expensive cars,” he said.
India is the fifth largest car market in the world, with annual sales of around 3 million units, and is dominated by Maruti Suzuki, which is owned by Suzuki Motor of Japan and Hyundai Motor.
In the country’s price-sensitive market, most cars sell for around $10,000-$15,000.
It is already mandatory to provide driver and front passenger airbags in all cars. According to auto market data provider JATO Dynamics, adding four more airbags will increase the cost by Rs 17,600.
In some cases, the cost could be higher as companies would need to make engineering changes to the car’s structure to accommodate the additional airbags, said Ravi Bhatia, president of India at JATO.
“Companies will need to decide whether it is possible to change and whether the model will sell for a higher price. The loss will be significant at the lower end of the market where there is heavy price sensitivity,” he said.
Government data shows that over 133,000 people were killed in 355,000 road accidents in India in 2020. Car passengers accounted for 13% of the deaths.
The road transport ministry is sticking to its plan and is pushing automakers to agree to the rules, two sources told Reuters.
The ministry estimates that four additional airbags will cost no more than $90, but it still faces resistance.
The Society of Indian Automobile Manufacturers (SIAM) has asked the ministry to “review and reconsider” the rules saying “side and curtain airbags are not mandatory anywhere in the world”.
In a letter to the ministry in February, the industry lobby group warned that the continued increase in the cost of cars in recent years gave enough time for the airbag rule “to minimize the risk of impact on industry growth”. should go.
Reuters has reviewed a copy of the letter that was not previously reported.
The Automotive Component Manufacturers Association (ACMA) has told the ministry that they can meet the additional demand for airbags, but will need 12-18 months to scale up local production.
The ministry, SIAM and ACMA did not immediately respond to requests for comment.