Economics of Airbags: Mandate To Have 6 Air Bags In 8-Seaters Drowns Automakers In Clouds Of Worry

Photo by Rahul Pugazhendi on Unsplash

The central government has pedaled up the safety of cars for 8-seater cars.

A minimum of 6 airbags is mandatory for these vehicles. 

The move is likely to come into effect from October 1 this year.

Airbags coming under scrutiny haven’t made the automobile industry too happy.

For one, it will definitely raise the cost of manufacturing and, in turn, hurt sales.

Cars will become more expensive – driving out a chunk of potential and entry-level buyers, the chairman of Maruti Suzuki, the country’s top-selling carmaker, said.

Adding another facet to it, India is a market where more than 80% of personal buyers opt for financing solutions.

This additional cost would spread across their monthly installment plans and translate into a mere Rs.150 extra.

Fitment of additional airbags would entail extra costs of Rs. 6,000-10,000 on a small car.

The Bigger Picture

The move also comes against tackling the broader concern of road safety, which Union Minister Nitin Gadkar is pushing.

Consumers’ shift and preference for SUVs over smaller cars and sedans are also among the many reasons for the new regulation in the country, which ranks at the top globally in road accident-related fatalities and 3rd in injuries.

Agreed that there is merit in having 6 airbags in a vehicle for occupant protection.

However, pedestrians and two-wheelers together account for 51% of road accidents in India.

What do you say about that, Minister?

Too long? Here’s a one-liner: The centre’s plan to mandate the 6 airbags in 8-seater vehicles could make these automobiles more expensive; automakers worried about potential buyers turning away.

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