With fatalities linked to road accidents highest in India, there’s a genuine need to take strong, decisive action
While the number of road accidents in India are close to that of countries like Japan and Germany, the fatalities are much higher. As per a World Bank report published last year, India accounted for 11% of all road accident-related fatalities in the world. Around 1.5 lakh people die every year in road accidents in the country. Due to these reasons, it has become important to improve road safety.
Towards that end, the government recently made 6-airbags as standard for all passenger vehicles. This rule is to come into effect for all new cars sold 1st Oct 2022 onwards. While carmakers that already offer 6-airbags won’t be impacted, it could create significant challenges for OEMs like Maruti Suzuki that dominate the small car segment.
Maruti seeks relaxations in 6-airbag rule
Maruti has quite a few best selling small cars such as Alto, WagonR, Celerio, S-presso and Swift. Their affordable pricing and reliable performance are among the key factors that make them a value for money proposition for customers. However, with the new 6-airbag rule, Maruti feels that these cars will no longer be available at affordable rates. This could have a major impact on sales.
For an entry-level car like Maruti Suzuki Alto, a number of changes will need to be carried out to accommodate the additional 4 airbags. In its current format, Alto is offered with driver and passenger airbags as standard. Additional sensors also need to be placed. Overall cost of fitting the additional airbags will be around Rs 20,000. Interestingly, Maruti is working on launching the new gen Alto in the coming months. Trial production is expected to start this month. It is likely that the new gen Alto 800 will come with 6 airbags as standard.
While the increase in price due to 6 airbags may be manageable for people opting for entry level SUVs and sedans, it can be a challenge for first time car buyers. For example, an individual upgrading from a two-wheeler to Alto may find it difficult to bear the additional cost. Such factors could limit sales of small cars, eventually forcing the company to discontinue certain models. In that case, many employees may lose jobs.
Will government make an exception?
While the government may have valid reasons for making 6-airbags mandatory, Maruti’s rationale cannot be ignored completely. Being a developing country, a significant chunk of car buyers rely on small cars. Needs of this segment of users that often give priority to affordability cannot be brushed aside with a single move.
If carmakers are forced to discontinue small cars, it will also impact the initiative to promote CNG use. As of now, it’s the small cars that have the highest sales of CNG variants. Maruti is the top supplier of factory-fitted CNG cars, which means it would take a big hit in case the 6-airbag rule starts to adversely impact sales.
It remains to be seen how the government handles this opposition to 6-airbag rule and if a more balanced solution can be worked out. Possibly other things such as stricter driving license tests and traffic safety awareness will also be needed to make our roads safer.
