India’s plan to make six airbags mandatory in passenger cars will make cars more expensive and drive out some of the potential buyers, the chairman of Maruti Suzuki, the country’s best-selling automaker, told Reuters.
Such a move will hurt sales of small, low-cost cars and put more pressure on companies already facing high costs, RC Bhargava said, while publicly pushing back what the government sees as an important safety initiative.
India, which has some of the world’s deadliest roads, released a draft proposal in January that would make six airbags mandatory in all passenger cars produced from October 1, 2022. The draft rules, which are part of a series of road safety measures, have yet to be finalized.
Sales of small cars have fallen due to the pandemic and these kinds of cost increases will only mean they will fall further, while large and expensive cars continue to grow, Mr Bhargava said.
“This will hurt the growth of the small car market and the smaller and poorer people who can’t afford the more expensive cars,” he said.
India is the world’s fifth largest car market, with annual sales of approximately 3 million units, and is dominated by Maruti Suzuki, the majority of which is owned by Japan’s Suzuki Motor, and Hyundai Motor.
In the country’s price sensitive market, the majority of cars sell for around $10,000-$15,000.
It is already mandatory to provide airbags for the driver and front passenger in all cars. Adding four more airbags will increase costs by Rs 17,600, according to automotive market data provider JATO Dynamics.
In some cases, the costs could be higher as companies have to make technical changes to the car’s structure to accommodate the additional airbags, said Ravi Bhatia, president for India at JATO.
“Companies will have to decide whether it is feasible to make the changes and whether the model will be sold at a higher price. The damage will be significant at the lower end of the market, where there is tremendous price sensitivity,” he said. .
More than 133,000 people died in 355,000 road accidents in India in 2020, according to government data. Car passengers were responsible for 13% of deaths.
The Road Transport Ministry is steadfast in its plan and is urging automakers to agree to the rules, two sources told Reuters.
The ministry estimates that four additional airbags will cost no more than $90, but even then it will meet resistance.
The Society of Indian Automobile Manufacturers (SIAM) has asked the ministry to “review and reconsider” the rules by saying that “side and curtain airbags are not required anywhere in the world”.
In a letter to the ministry in February, the industry lobbying group warned that as the cost of cars has steadily risen in recent years, sufficient time must be given for the airbag rule “to reduce the risk of impacting the growth of the economy.” industry to reduce”.
Reuters has viewed a copy of the letter that has not been previously reported.
The Automotive Component Manufacturers Association (ACMA) has informed the ministry that they can meet the additional demand for airbags, but they need 12-18 months to ramp up local production.
The ministry, SIAM and ACMA did not immediately respond to a request for comment.