Riding on safety

Airbag suppliers sense opportunity in stringent car safety norms

While Volkswagen and other leading carmakers are embroiled in a controversy for rigging emission tests abroad, there is an interesting trend emerging among automobile manufacturers in India. Gone are the days when safety features were neglected to keep the price low. Discerning customers are driving carmakers to integrate essential safety fitments like airbags even in low-cost models.            

Until recently, airbags were considered a luxury — a safety feature available in high-end models only. This despite the dismal record of road accidents in India — a person is killed every four minutes in a road accident. A few years ago, among the mid-range cars, Volkswagen began offering airbags in its hatchback Polo, but VW was an exception. However, that is set to change. When Ford launched its Figo Aspire in August this year, the US automaker claimed it was the first sub four meter sedan to offer two air ags as a standard, even in the base model. Mahindra, too, offered an optional airbag when it launched its compact SUV, the TUV 300 last month.

What has fueled this change? “Primarily, the consumer has become more cautious now,” feels Puneet Gupta of IHS Automotive Forecasting.  Last year, most Indian car models made headlines for having failed the global New Car Assessment Programme car crash test. “Even vehicles like Maruti Swift failed (Swift’s Latin American version passed the test though). That was a setback for the small car industry. I think it started from there,” he adds. Another reason for this could be the proposed Road Transport and Safety Bill that requires cars to undergo crash tests from 2017. This could mean that cars without airbags may score a low rating.

In addition to the stringent new norms, there is another important factor. “There has been a segment shift in the last two years. Earlier consumers were concentrated in the A segment (This comprised models such as Maruti Suzuki’s Alto and Hyundai’s Eon), now they have moved to the B segment (This includes models like the Hyundai i20, Ford Figo and the Honda Jazz). That move also is also responsible for this change,” explains Gupta. In a bid to make their B Segment cars more appealing to customers, carmakers are striving to pack in expensive features. Increasingly, they are offering airbags either as a standard or optional feature in this segment.

All of this has fueled a growth in the sales of airbag suppliers as well. Airbag manufacturers have started setting up local facilities and ramping up capacity eyeing what they predict will be a $2-billion opportunity by 2020. Major international airbag manufacturers such as Autoliv, Takata, TRW Automotive and Toyoda Gosei have arrived in India. Primarily because they know that 2017-18 will be the time when airbags will become mandatory in all cars — especially for the driver’s seat — to sustain crash tests.

“Earlier they were hesitant to invest in airbag technology in India. Everything was being imported. The price was ₹30,000-40,000, now the price has come down to ₹10,000. That has helped OEMs install airbags in B segment and even A segment cars. Even Renault Kwid came with an airbag in its top-end variant,” says Gupta. The soaring exports by the likes of Hyundai, Nissan, Maruti, and Ford has also assured airbag makers of future orders.

Aiming to cash in on the opportunity in India, in September this year, Japanese car components manufacturer, Toyoda Gosei increased its share in its subsidiary TG Kirloskar Automotive. Now called Toyoda Gosei South India, it manufactures airbags and other safety fixtures. Rane-TRW Steering Systems, an equal joint venture between Chennai-based Rane Holdings and US-based automotive safety major TRW, started assembling airbags in 2013. The company inaugurated its new airbag manufacturing facility in Chennai in August this year. Rane-TRW counts Mahindra and Mahindra, Ford, Renault among its clients. Its occupant safety division (seat belts and airbags) registered sales worth ₹200 crore this year and aims to increase it to ₹750 crore by 2020. It seems that as airbags render Indian drivers safe behind the wheel, it will make manufacturers behind the assembly lines richer.