India’s new PV safety norms present big opportunity for airbag makers: ICRA

by Shourya Harwani , 06 Jun 2016

The timely implementation of new passenger vehicle safety norms under Bharat New Vehicle Safety Assessment Programme (BNVSAP) in India could lead to the country’s airbag market touching revenues of Rs 1,900-2,300 crore by FY 2020, according to a report by the ratings and research agency ICRA.

“Although the proposed safety standards don’t make airbags mandatory but in order to achieve adequate safety ratings for frontal collision, airbags would become a necessary fitment. We believe this will also open up a sizeable market opportunity (Rs 19-23 billion by FY 2020) for airbag suppliers as its penetration in PVs could increase exponentially from  approximately 30-35% (at present) to nearly 90%,” the agency said in its report.

Under the new norms, passenger vehicles will receive star ratings based on how they perform under various crash tests and associated parameters. These norms will come into effect from October 2017 for new models and October 2018/19 for all the existing models.

While most of the suppliers of airbags in India are foreign players (i.e. Takata, Autoliv, TRW, Toyoda Gosei), citing the strong growth prospects, some Indian component manufacturers have also entered this space. However, ICRA says that even as the market opportunity is sizeable, the value addition for domestic suppliers would be low in the near-term due to limited scope for backward integration and lack of technological capabilities.

The import content in airbags currently stands at 60-80% as the key components i.e. inflator and sensors are imported. Developing these locally would require scale and technical capabilities, but once these are installed the economies of scale could even make India a big exporter of safety equipment like airbags to other parts of the world, thus driving the costs down even further.

Need for faster implementation

India tops the list of countries with the highest number of road fatalities, with over 140,000 people losing their lives on country’s roads every year and leaving over 550,000 injured. Thus, improving passenger vehicle safety is of utmost importance and a top priority. Carmakers have now started emphasising on this aspect of motoring, but standards need to improve drastically. The crash tests of Indian cars conducted by Global NCAP in 2014 and this year clearly point out to the dire need to improve car safety.

In January 2014, Global NCAP published crash test results for five of India's best-known cars: the Maruti Suzuki Alto 800, Hyundai i10, Ford Figo, Volkswagen Polo and the Tata Nano. All the cars received zero-star adult protection ratings. Volkswagen immediately decided to offer the Polo for sale in India with two airbags as standard. This model received a four-star safety rating. In November 2014, Global NCAP published crash test results for Nissan's Datsun Go and the Maruti Suzuki Swift. Both cars received zero-star adult protection ratings. Also, the Toyota Etios, equipped with two airbags, got a four-star rating in a voluntary test.

In another round of tests conducted recently, GNCAP tested five high-selling Indian cars including the Renault Kwid, Maruti Suzuki Celerio, Maruti Suzuki Eeco, Mahindra Scorpio and Hyundai Eon, and found low levels of adult occupant protection on all these vehicles, which resulted in zero star ratings for all the five cars. The Renault Kwid was tested in three versions, including one with airbags, but each was rated as zero-star for adult safety.

Currently, among mass market players, only Toyota and Volkswagen offer airbags as standard on all their vehicles sold in India.


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