New Indian car safety policy will cost industry Rs 12,000 crore

Since the new government is in place, it has been focusing a lot on making Indian roads safer. After penning down the new motor vehicles act (which is yet to be passed), the government has proposed to equip all cars with airbags and anti-lock braking systems (ABS).

The Indian car manufacturers seem to be unhappy with this proposal as they fear that this would result in an increase in the price of the cars which could impact the overall sales. These safety features that are mandatory in US and European markets, will increase the price by up to Rs 40,000 per car, which the manufacturers feel is significant. The car manufacturers will take a hit of Rs 12,000 crore if this proposal is passed and they are unable to pass this cost onto the customers, which is highly unlikely. This figure was calculated by considering an average price of Rs 4 lakh for annual sales of around three million vehicles. 

"We do offer airbags and enhanced safety features such as anti-lock braking systems in top-end variants. Customers can opt for them according to affordability. If such features are made mandatory across all variants and all models, it will result in increasing the price of vehicles and affect sales, especially at the entry level," said a senior Maruti Suzuki executive.

During a recent interview with a top honcho of Maruti Suzuki, he mentioned that if ABS and airbags are made mandatory for all the variants, including entry level models, the price of these variants are bound to increase. This would lead the consumer to cancel his plan to buy a car and instead opt for a two-wheeler, which is not safer as compared to cars. 

While we understand that all the car manufacturers are trying to increase their cash reserves, safety of their consumers should be their top most priority and this could be only achieved by manufacturing safer vehicles. 

Source: business-standard