Maruti: Ready to quit small cars if cost turns unviable | India News – Times of India
Asked about the upcoming mandate for six airbags on passenger vehicles, pushed aggressively by none other than Union Transport Minister Nitin Gadkari, Bhargava said that the move will end up increasing the prices of the cars even as the measure may not help in effectively tackling the issue of the large number of deaths on Indian roads due to accidents.
“If the policy becomes such that small cars don’t remain viable, we will discontinue them,” Bhargava told TOI, adding that the company itself doesn’t make any significant profits through the sale of the compacts. “The question that we need to ask is that is it a good thing for the country if low-cost cars disappear from the market… the car industry will slow down. There will be less employment in the auto sector.”
Gadkari, however, has time and again pressed upon the need for increased safety in vehicles. “In order to enhance the safety of the occupants in motor vehicles carrying up to eight passengers, I have now approved a Draft GSR (General Statutory Rules) Notification to make a minimum of 6 Airbags compulsory,” Gadkari had tweeted in January.
Maruti’s Bhargava, however, said that Maruti’s dependence on small cars is not as high as it is perceived to be. “Our profits don’t depend on small cars. People have a wrong notion. We sell them almost without profits if you look at models such as the Alto.”
He also shot down criticism that Maruti has reservations around the six-airbag policy as it fears that any slowdown in sales of small cars will see its market share decline further.
“This is a shallow analysis. We can make more numbers of bigger cars. We are introducing new SUVs now. We will regain market share… Suzuki (Maruti’s parent) and Toyota are partners today. Do you think we have a problem in making bigger cars?… We can still run the company (Maruti) profitably. It’s an absolute false analysis that Maruti will go down if small cars go down.”
Bhargava said that instead of pushing for measures that make the cars expensive, the government should take steps that will help in tackling the rising number of accidents and road deaths.
“A study was done which showed that if additional airbags are fitted, they will reduce road deaths by just half per cent. In addition, even the use of seat belts in India is under 30%. Without using seat belts, air bags become a hazard by themselves,” he said, adding that around 60% of the deaths are that of pedestrians and two-wheeler riders.
“What you have on the roads are a lot of vehicles that are not fit with respect to safety requirements. A large number of accidents and deaths are caused due to failure of safety systems in cars and commercial vehicles. Two-wheelers are also not inspected for fitness. That’s a big reason why two-wheeler riders and pedestrians get killed.”
The Maruti Chairman said that data released by the Ministry of Transport shows that two-wheelers account for 43% of deaths in road accidents while pedestrians for 18%. “Reducing these deaths should be priority.”
He said that if small cars get further expensive, the lower-income families would be forced to buy the relatively-unsafe two-wheelers instead of upgrading to cars. “With additional airbags, vehicles will get more expensive and production and sales will go down… Now which is the category of buyers that will not be able to buy cars due to higher prices? It’s the lower end of the market. They will be forced to buy two-wheelers that are less safe. The rich people will continue to buy cars as they have the money.”
To drive home his argument, Bhargava said that there was a 28% decline in sales of small cars after prices went up due to the introduction of BS6 emission norms. “Sales will be further impacted if prices increase again… What will happen if the lower end of the society doesn’t buy cars? Then they will buy two-wheelers. Will that increase the safety on the roads, or rather decrease it further? Those (two-wheelers) are less safe.”
He also said that a hit on the sales of small cars will be bad for the Indian economy and the growth of the car market.
