Following the recent announcement by the Union Minister for Road Transport & Highways of India Nitin Gadkari mandating six airbags in cars in India, the country’s largest carmaker Maruti Suzuki India Limited (MSIL) has expressed concern that this new rule would make cars more expensive and drive out a chunk of potential buyers.
R.C. Bhargava, chairman of Maruti Suzuki, said that such a move will hurt sales of small, low-cost cars and put more pressure on companies already facing high costs.
Bhargava during an interview with Reuters said, “This will hurt the growth of the small car market and the smaller and poorer people, who cannot afford the more expensive cars,” He added that “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 where there is huge price sensitivity,” Bhargava also stated that small car sales have been plummeting throughout the epidemic, and these cost hikes will only make them fall more, he added that on the flip side the big and luxury automobiles continued to climb.
According to auto market data provider JATO Dynamics, the majority of cars in India sell for around $10,000-$15,000 and adding another four airbags on top of the mandatory driver and front passenger airbags, it will increase the cost of cars by an additional Rs 17,600 ($231). Ravi Bhatia, president for India at JATO said that in some cases, the cost could be higher as companies will need to make engineering changes to the car’s structure to accommodate the additional airbags.
India, which currently has some of the world’s deadliest roads, recorded a total death tally of 1,33,000 in 3,55,000 road accidents in 2020 in which car passengers accounted for 13% of the deaths. As a result, the Union Minister for Road Transport & Highways of India Nitin Gadkari released a draft proposal in January mandating six airbags in all passenger cars manufactured from Oct. 1. Currently, in draft form, the rules are yet to be finalised.
As per some sources close to the government, India’s road transport ministry is firm on its plan and is pushing automakers to agree to the rules. The ministry estimates that four additional airbags should cost no more than $90, but it is still facing resistance from automakers. Meanwhile, the Society of Indian Automobile Manufacturers, said that “Side and curtain airbags are not mandatory elsewhere in the world,” and has requested the government to “examine and rethink” the guidelines.
The industry lobby organisation cautioned the ministry earlier in February that, with the cost of automobiles gradually growing in recent years, adequate time must be allowed for the requirement of the additional airbags “to avoid the danger of damage on industry growth.” The Automotive Component Manufacturers Association (ACMA) has also advised the ministry that it can satisfy the increased demand for airbags, but that ramping up domestic production will take 12-18 months.