Maruti Suzuki India (MSI) wants the government to reconsider the proposal to make six airbags mandatory in passenger vehicles, saying the norm will adversely hit the already shrinking small car market and may even impact jobs in the auto sector going ahead. The auto major noted that the regulation would largely impact the cost-sensitive entry-level car segment — which has been facing headwinds and witnessing dwindling sales over the last three years — making it even more difficult for two-wheeler users to upgrade to small cars.
Earlier this year, the road transport ministry said it will make it mandatory for carmakers to provide a minimum of six airbags in motor vehicles that can carry up to 8 passengers for enhanced safety of occupants from October this year. In an interaction with PTI, MSI Chairman RC Bhargava said the cost of the entry-level cars has already gone up considerably due to the implementation of various regulatory norms in the past few years, including the BSVI emission regime from April 1 2020.
With prices going up, the sales of small cars have been impacted especially in the non-metro markets across the country, the veteran industry leader noted. He cautioned that with the implementation of the six airbag regulation the prices will further go up leading to further shrinking of the domestic small car industry.
"So, the fear is that due to this (six airbags) the market will become smaller. The car manufacturing sector is important because it is a big creator of employment. When the car sells in the market it creates many jobs — drivers, maintenance, repairs, accessories etc," Bhargava stated. He further said: "If the car market does not grow like what has been happening in the last three years it will have an adverse effect on job creation and economic growth".
When asked how much the price of cars could go up due to the addition of airbags, Bhargava said: "I am not sure but it could be in the range of Rs 20,000-25,000, which for a small car buyer is a lot of money". He noted that there were not many countries across the globe, which may have implemented such a regulation.
"I think, we will be among the first countries to do that…so we in the industry think that it is not the right time to bring six airbag regulations. We would like the government to reconsider this matter," Bhargava said. As per the government, the airbags will ensure the safety of passengers across all segments, irrespective of the cost/variant of the vehicle.
According to the latest government data, a total of 1,16,496 road accidents occurred on national highways (NHs), including expressways, in 2020, causing 47,984 deaths. While acknowledging that airbags do help save lives in case of road accidents, Bhargava noted that the cost increase due to the regulation will, however, deter many driving two-wheelers to upgrade to entry-level cars.
"Driving a two-wheeler is any day more unsafe than driving a car. So, overall fatalities due to car accidents may come down..whereas the chances of fatalities in the two-wheeler may go up. So, overall if there is benefit in all of this, it is a matter of pondering," he stated. The matter needs to be seen in totality, Bhargava noted.
He stated that the impact on small cars is more compared to bigger cars when the cost goes up. "So, that is what has happened and now, we will have this extra cost again of additional airbags, so the industry has expressed a view that the market will become further smaller for the small cars," Bhargava said.
He noted that with a hit on the affordability factor, small car offtake is shrinking in the smaller cities, towns and rural areas while the market for expensive cars in urban centres was going up across the country. MSI is the dominant player in the hatchback segment with a market share of over 70 per cent. It sells models like Alto, S-Presso, and Celerio, among others, in the vertical.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
