Indian car makers were recently given a warning by the government, that they would need to start implementing better safety features into their vehicles, following on from horrific results in safety testing of many of the country’s most popular vehicles. Apparently though, the auto-makers don’t want to make their cars safer, citing rising costs as the reason (even suggesting that it would make people not buy new cars and therefore they would be less safe).
Now though, we actually have an estimation on how much it will cost the Indian auto-industry as a whole: up to 12,000 rupees crore. Since a crore is a measurement of around 10 million, this would represent, 120 billion rupees, or around 1.2 billion pounds.
That’s a lot for anyone to absorb, though it isn’t just one company but every auto-maker in the country and it might end up being less than that too. It ultimately breaks down to around £120 per vehicle produced, which is up to 15 per cent of its retail value. This could mean that prices will go up, but due to competition, it will be interesting to see if no one wants to be the first to suddenly raise all of their prices by such an amount.
They’ll need to decide either way though, as it looks like the government is going to make the safety improvements – which should mean anti-lock brakes, as well as incorporating airbags – mandatory. While some would argue that it would make more sense to force a certain level of structural integrity for vehicles, this is at least a good step to reducing the number of road deaths in India, which are almost reach a quarter of a million a year. Far higher than any other nation, except China.
The 0 star safety rating for the Datsun Go prompted much of this discussion on Indian road safety
The car makers still aren’t happy though, with a senior executive at Maruti Suzuki saying in a public statement: “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.”
Some analysts have agreed, suggesting that because of the low-capita income of many Indian households, that raising the price of vehicles across the board (due to the mandatory safety feature costs being passed along to the customers) could lead to many people not buying cars and opting for even more dangerous bikes or bicycles for their mode of transport.
However, some are much more fore the safety improvements, such as auditor Price WaterhoursCoopers. Partner there, Abdul Majeed said: “With road infrastructure improving, the average speed on Indian roads has been going up. As much as 30-40 per cent of road accidents happening in the country can be avoided if cars are equipped with basic safety features. It is true the cost will go up but if customers are educated, sales should not be a problem. Nobody would want to risk their lives for Rs 35,000-40,000,” he said.
It seems like a no brainer to make cars safer, but do you guys think that raising prices will have a negative impact on road safety in India? It seems hard to imagine it getting any worse.
Image source: Balaji B
[Thanks BusinessStandard]
