Maruti May Exit Small Car Segment – Alto, S Presso, EECO, Celerio

Maruti Suzuki wants the Government to rethink their 6 airbag mandate for passenger vehicles

The Government of India is set to bring in the 6 airbag mandate for passenger vehicles from 1st October 2022. This would not only increase passenger safety in particular, but would make it safer for road users in general. However, there are certain automakers that are against this policy coming into effect.

As on date, all cars in India are equipped with only 2 airbags as standard – one for front passenger and one for driver, as per a Government mandate passed just a few years ago. There are cars which come with 6 airbags in India, but that is not a compulsion as of now. With the new rule, Govt of India is making 6 airbags compulsory for all cars in India from Oct 2022. This will not only make cars more expensive but would also make it economically unviable especially for auto manufacturers of smaller vehicles.

6 Airbags to Increase Production Cost

Maruti Suzuki is among these automakers who have voiced their concern regarding the 6 airbag rule. They have sought Government intervention prior to bringing this regulation into effect; so as to weigh the adverse impact it could create. Currently a leader in the small car segment, Maruti feels that mandating a 6 airbag policy will make these small cars economically unviable.

While conducting a feasibility study of adding 4 additional airbags, Maruti states that the cost of its entry-level models could see an increase of up to Rs 60,000 in the final cost as it would require some structural changes in design. The 5 most affordable Maruti cars on sale today include – Alto (Rs 3.25 L onwards), S-Presso, EECO, Celerio and Ignis. Of these, it is the Alto and S-Presso which are listed as cars from their base segment.

This cost could go higher in the case of larger vehicles. Maruti Suzuki surmises, that it will not only drive away potential buyers from the small car segment, but these increased costs will also make it more difficult for current two wheeler owners to upgrade to a small four wheeler. Hence the fate of small cars in India will hang in a balance if this rule is brought into effect.

The company also states that it will not be possible to fit a total of 6 airbags into smaller cars. If this regulation comes into effect, we may see Maruti Suzuki stop production of small cars from its lineup. Maruti Suzuki currently holds a market share of 70 percent of the hatchback segment in India while Hyundai, Tata, Honda and Renault are also other players in this segment.

Maruti Ready To Exit Small Car Segment – Chairman

MSIL Chairman RC Bhargava said the cost of entry-level cars will increase following modifications in design to incorporate the added 4 airbags which would be economically unviable for the company considering that it is bound to have an adverse impact on sales. Hence the company would not hesitate to exit the small car market which would be unviable if this new government mandate is introduced.

The auto industry is seeking time for implementation of the 6 airbags rule. Automakers cite that in the recent past, the BS6 emission standards resulted in a price hike while particularly the small car segment has also been impacted by rising input costs. The current pandemic and the overall economic scenario in the country has had an adverse effect on the car market which is also a major creator of employment.

Union Minister Calls Out Double Standards

Union Road Transport Minister, Nitin Gadkari has not taken well to the opposition from certain manufacturers. He is of the opinion that the opposition created for 6 airbags rule and compulsory Bharat NCAP rating – is nothing but double standard of some car makers. He adds, some car makers will offer top safety features and 6 airbags in export-spec cars but not for cars that are on sale in India. Gadkari wants the same safety features for India-spec cars that are offered for export-spec cars. Earlier, the Minister had told Parliament that if all cars had 6 airbags in 2020 – 13,000 lives could have been saved.

Besides auto makers, the Automotive Component Manufacturers Association (ACMA) has also written to the ministry citing that though they can meet additional demand for airbags it would require a time frame of 12-18 months to ramp up local production. Society of Indian Automobile Manufacturers has asked the ministry to “review and reconsider” this 6 airbag regulation stating that “side and curtain airbags are not mandated anywhere in the world”.

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