Asked about the upcoming mandate of six airbags on passenger vehicles, none other than the Union transport minister pushed aggressively Nitin GadkariBhargava said the move will lead to a rise in the prices of cars even though the measure may not help effectively tackle the issue of a large number of deaths on Indian roads due to accidents.
“If the policy becomes such that small cars are no longer viable, we will discontinue them,” Bhargava told TOI, adding that the company itself does not make any significant profit through sales of compacts. “The question we need to ask is whether it is a good thing for the country if low-cost cars disappear from the market… the car industry will slow down. Employment in the auto sector will be less.”
However, Gadkari has repeatedly emphasized the need to enhance safety in vehicles. Gadkari had tweeted in January, “In order to enhance the safety of riders in motor vehicles carrying up to eight passengers, I have now approved a draft GSR (General Statutory Rule) notification making minimum 6 airbags mandatory. ”
Maruti’s Bhargava, however, said that Maruti’s dependence on small cars is not as much as is believed. “Our profits do not depend on small cars. People have a misconception. If you look at models like Alto, we sell them almost without profit.”
He also dismissed criticism that Maruti has reservations around the six-airbag policy as it fears any slowdown in sales of small cars will further dent its market share.
“It’s a shallow analysis. We can make a greater number of bigger cars. We are introducing new SUVs right now. We will regain market share… Suzuki (parent of Maruti) and Toyota are partners today. Do you think we have a problem in making big cars?… We can still run the company (Maruti) for profit. It is absolutely wrong analysis that if small cars go down then Maruti will go down.
Bhargava said that instead of insisting on measures that make cars costlier, the government should take steps that help tackle the rising number of accidents and road deaths.
“There was a study which showed that if additional airbags are fitted, they will reduce road deaths by only half a percent. Moreover, seat belt usage in India is also less than 30%. Without using seat belts, air bags become a danger in themselves,” he said, adding that around 60% of the deaths are of pedestrians and two-wheeler riders.
“On the roads you have a lot of vehicles that do not fit with respect to safety requirements. Failure of safety systems in cars and commercial vehicles causes a large number of accidents and deaths. Two wheelers are also not tested for fitness This is one of the major reasons why two-wheeler riders and pedestrians die.”
The Maruti chairman said the data released by the transport ministry shows that two-wheelers account for 43 per cent of road accidents while pedestrians account for 18 per cent. “Reducing these deaths should be a priority.”
He added that if smaller cars become more expensive, low-income households will be forced to buy relatively unsafe two-wheelers instead of upgrading to cars. “With additional airbags, vehicles will become more expensive and production and sales will go down… Now what is the category of buyers who will not be able to buy cars due to higher prices? This is the low end of the market. They will be forced to buy less safe two wheelers. Rich people will continue to buy cars because they have money.”
Bhargava to bolster his argument that sales of small cars have declined by 28% after the hike in prices due to the introduction of BS6 emission norms. “If prices rise again, there will be a further impact on sales… What if the lower end of the society will not buy cars? Then buy two-wheelers. Will this increase the safety on the roads, or rather, reduce it further? They (two-wheelers) are less safe.”
He also said that the impact on small car sales would be bad for the Indian economy and the growth of the car market.