Report – Improving Indian car safety to come at a cost of INR 12,000 crore

Posted on: Dec 2, 2014 - 7:07pm IST

Car prices to shoot up 15% if ABS, airbags are made standard. 

Road transport and highways minister, Pon Radhakrishnan, told the Rajya Sabha yesterday that the government is set to unveil crash test norms for cars very soon. To meet new regulations, car makers might have to include safety features such as ABS and airbags as part of standard equipment, he said.

Maruti Swift Global NCAP crash test
The base variants of all non premium cars (excluding the Toyota Etios, Liva and VW Polo) are devoid of airbags. Cars like Eon, Alto and Nano don’t offer ABS on any variant.

Car makers might have to take a hit of nearly INR 12,000 crores if the government indeed mandates ABS and airbags. Of course, manufacturers will miss out a portion of their profits only if they decide not to increase prices, which is reported to be around 10-15 percent.

The increase in prices will have an adverse impact on new car sales in India, which has just started showing signs of recovery thanks to drop in fuel prices and excise duty. More importantly, 50 percent of new car buyers in India are upgrading from a two-wheeler or a ‘no-wheeler’, and higher prices are certain to make them postpone buying, says Mayank Pareek, president of passenger vehicles for Tata Motors.

Datsun Go Global NCAP crash test
According to Global NCAP findings, even fitting airbags in the Datsun Go will be of little help due to its structural weakness.

Given that a four-wheeler is safer than a two-wheeler never mind the car model, higher prices but better safety features could have a negative impact overall, especially when considering that only 18 people out of 1,000 own cars in India, Pareek opined.

Also read: Datsun Go, Maruti Swift fail Global NCAP crash test

According to him, the cut-off limit for increasing prices is INR 5,000, beyond which if the price of an entry-level car increases, prospective buyers will turn away.

[Source – BusinessStandard]

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6 thoughts on “Report – Improving Indian car safety to come at a cost of INR 12,000 crore

  1. GJ says:

    It is a right move! Safely comes prior to affordability. I guess its high time to get this in place.

    Reply
  2. Dr. Nayak says:

    Typical nonsense! People are spending more than 15K on new
    car decorations like stickers,sun films, and seat covers. I thought majority of new car
    bookings went to middle/top end variants costing more than 200K than the base
    model. Safety is the most important thing in life and life can’t be recreated.
    Even if we save few lives (it is someone else’s child, father, mother, brother,
    or wife) it is worth the cost. I think Pareek has no idea that Nano did not sell because it is cheep. I am sure he is not driving one of these tin cans to work, but still has the option of driving an old 800 to work to empathize with the mass.

    Reply
  3. manankp says:

    Tell these manufactures to use only those cheap,unsafe cars for their family and kids for an year. Then lets hear what is their opinion afterwards.

    Reply
  4. Joy says:

    Nothing wrong in making 2 airbags and ABS as standard. Let the makers reduce their profit in these 2 things.

    Reply
  5. Ravi says:

    12000 crores??? The additional cost of the safety equipment will be on the end customer… so how will the companies face loses? Since its only addition of equipment for now and not having any crash test mandatory don’t see how they got to this number.. IAB guys what is the source of this news?

    Reply
  6. Ravi says:

    12000 crores??? The additional cost of the safety equipment will be on the end customer… so how will the companies face loses? Since its only addition of equipment for now and not having any crash test mandatory don’t see how they got to this number.. IAB guys what is the source of this news?

    Reply

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Anjan
Anjan Ravi

I'm a true-blooded petrolhead. Hope you enjoy our news stories, launch coverages, motorshow coverages and test drive reports.