India’s mandatory airbag proposal will hurt sales, says top carmaker.
In January, India, some of the world’s deadliest roads, released a draft proposal directed six airbags in all passenger cars manufactured from Oct. 1.
The draft rules, part of road safety measures, are yet to be finalized.
Sales of small cars have been decreasing through the pandemic, and these kinds of cost rises will only mean that they will go down even more while expensive and big vehicles continue to grow, Bhargava said.
“This will hurt the growth of the small car market and the smaller and poorer people, who can not afford the more expensive cars,” he said.
India is the world’s fifth-largest car market, with annual sales of around 3 million units a year, and is dominated by Maruti Suzuki, the majority-owned by Japan’s Suzuki Motor (7269. T) and Hyundai Motor (005380. KS).
In the country’s price-sensitive market, most cars sell for around $10,000-$15,000.
Providing driver and front passenger airbags in all vehicles is already mandatory. According to auto market data provider JATO Dynamics, adding another four airbags will increase the cost by 17,600 rupees ($231).
India’s mandatory airbag proposal will hurt sales, says top carmaker
In some cases, the cost might be higher. Companies will need to make engineering changes to the car’s structure to accommodate the additional airbags, said Ravi Bhatia, president for India at JATO. “Companies will need to make a decision 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,” he said.
More than 133,000 people were killed in 355,000 road accidents in India in 2020, government data showed.
Car passengers accounted for 13% of deaths.
The ministry estimates four additional airbags to cost no more than $90, but it is facing resistance even then.
The Society of Indian Automobile Manufacturers has asked the ministry to “review and reconsider” the rules saying “side and curtain airbags are not required anywhere in the world.”
In a letter to the ministry in February, the industry lobby group warned that with the cost of cars steadily rising in recent years, enough time must be given for the airbags rule “to reduce risk of impact on industry development.”
The Automotive Component Manufacturers Association (ACMA) has told the ministry they can meet the additional demand for airbags but would need 12-18 months to ramp up local production.
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