Carmakers to take a hit of Rs 12,000 crore if government mandates Airbags
According to industry experts, car makers in India would have to take collective hit of around Rs. 12,000 crore if prices of safer variants are not hiked. If the manufacturers decide to pass on the excessive cost to customers, they would have to increase ex-showroom prices of each car / variant by 10 to 15 percent, which would translate to minimum of Rs. 35,000.
But, this would hurt sales. So price hike must be very nominal to keep (inevitable) sales downtrend in check but at the same time they will be loosing on revenue.
Various industry experts and representatives of leading car makers in India have shared their views which will be considered by the government before notifying on a proposal to make said safety equipment mandatory on all car variants.
While some argue that since per capita income is low in India price hike in cars will affect affordability and many may put off the buying decision, which would affect sales drastically. There is also a statement that around 50 percent of car buyers are upgrading from a two-wheeler or ‘no-wheeler’, for whom any car is safer. Some have pointed out that most cars come with ABS and Airbag in top end variants and customers are always free to opt for them. But it is to be noted that high end variants equip several other features apart from such safety oriented ones and hence price difference is around Rs. 1.4 lakh compared to the model just below.
On the other hand, some mention that it is not a problem if prices of cars go up because customers are educated and they wouldn’t want to risk their lives for Rs. 35,000 to Rs. 45,000. Offering such safety features for over a lakh more combined with many luxury facilities is the reason car buyers are not encouraged.
Via – Business-Standard