Insights Tag： India Automotive

Every year in April, the beginning of a new fiscal year for the Indian Government as well as most Indian companies, automotive OEMs and component manufacturers in the country brace themselves for change in regulations. This year they have the added responsibility of complying with a whole new set of specific safety norms to prevent fatal and severe road accidents.

Indian roads are known to be one of the most dangerous in the world. While statistics for 2018 are still awaited, in 2017, road accidents claimed 147,913 lives and left 470,975 people severely injured. However, as per the World Health Organization (WHO), official figures capture only half of the total road fatalities. For example, in 2016, while India reported 150,785 road fatalities, WHO estimates 299,091 people lost their lives in road accidents. WHO’s figures translate to 23 out of every 100,000 people losing their lives in road accidents.

The combination of new regulations and the Global New Car Assessment Program’s (NCAP) ‘Safer Cars for India’ project is raising consumer demand for critical safety features such as airbags, and acting as an impetus for enhanced safety by Indian automakers.

Let’s have a look at the safety features that passenger car and two-wheeler consumers can expect as a standard fitment throughout FY2020: –

April 2019: Compulsory fitment of ABS/CBS for 2W and ABS for Cars.

As per latest regulations, in effect from April 2019, all new two-wheelers with an engine displacement over 125cc, are to be equipped with Anti-Lock Braking Systems (ABS), a feature that prevents wheels from locking up, even with hard braking. Smaller displacement models, with engines <=125cc, will be compulsorily fitted with a Combi-Braking System (CBS), enabling both brakes with a single lever. While the mandate was already applicable for all new two-wheelers introduced after April 1, 2018, it now extends to all existing models too in the market. In readiness to comply with these norms, most Indian two-wheeler manufacturers had already begun upgrading existing bikes with either single or dual-channel ABS. Bosch, Continental, and Endurance are key players in this race. Similarly, for all new cars launched from April 2018, fitment of ABS was compulsory. The latest mandate is now applicable for all cars on sale, including existing models, from April 2019.

July 2019: All new cars sold in India, must feature a driver-side airbag, a speed warning alarm, seatbelt reminder alarms for both driver and co-driver, and rear parking sensors as standard fitment.

As widely acknowledged, airbags, in combination with front seat belts, significantly reduce driver and front passenger injury in the event of head-on collisions. The driver-side airbag will be a mandatory fitment on all cars produced from July 2019. Along with the stronger structures required to meet new crash test norms, an airbag will drastically reduce injuries sustained in the event of a frontal collision. While the norms mandate only a driver-side airbag, dual airbags, which provide enhanced protection to the front-seat occupant as well, are presently offered as standard equipment, in mid to premium level models by most OEMs in the country.  At an average US$130-US$150 per airbag unit, Counterpoint Research estimates the mandatory fitment offers a potential business opportunity of US$350 to US$400 million annually in the country. Currently, leading vendors of airbags for passenger vehicles include Autoliv, KSS Abhishek Safety Systems, Rane TRW, and  UNO Minda-Toyoda Gosei. Denso and Bosch are both key suppliers of the airbag control units and electronic components required in these modules.

A Driver and co-driver seat-belt reminder alarm will be yet another audio warning. It will be active until both the driver and the front passenger are belted up. The three-point front seat belts, which are passive safety supports, need to be buckled for airbags to be effective.

The proposed speed warning system is mandated to beep an alert every 60 seconds when the car is running at above 80kph, and continuously sound at speeds above 120kph. The system cannot be overridden or turned off and is intended to discourage over-speeding, a root cause of most road accidents.

Also to be standard on all cars, are reverse sensors. These sensors activate when the reverse gear is engaged, providing at least an audio warning of the objects in the path of the vehicle. In some vehicles, the advanced features offer an audio-visual warning system. Parking sensors can help prevent injury to children or collision with low objects, that are not visible by the car’s side and rear-view mirrors. While most premium vehicles come equipped with reverse parking sensors or reversing cameras as part of their standard equipment, reverse sensors are limited to a select few models in the budget segments currently.

Cars with central door locking will now, by law, require a manual override switch. Also, for public transport vehicles, rear-door child locks cannot be fitted. This is an unfortunate outcome of incidents in which the feature, which allows rear-doors to be opened only from the outside, were intentionally engaged to trap passengers.

 OCTOBER 2019: Crash test norms compliance

More stringent requirements for full and offset frontal and lateral/side collision impacts have been in force on all cars launched after October 1, 2017. The latest requirements further expand the scope to all models on sale in India from October 1, 2019. As per these new crash-test standards, vehicles will undergo tests for full-frontal impact at 48KPH, offset-frontal impact with a fixed deformable barrier at 56KPH, and side impact with a mobile deformable barrier at 50KPH. As a result, most OEMs in India are having to re-engineer or phase out older models to comply with the new standards. In effect, with these new crash test compliance requirements, 2019 will be the end of the road for many older models.

With the current slowdown in automotive sales in the country and sentiments remaining subdued, it will be difficult to pass on the full cost increases of these added features to end consumers. Research on preferences of Indian customers has demonstrated a preference for added convenience/accessory features over safety equipment. Raising consumer awareness on the benefits and utility of safety features will be critical for customers appreciating such features rather than balking at their costs. Supported by active campaigns, consumers are indeed growing more conscious about the benefits of essential features of safety, such as airbags and ABS. With these safety features being applicable for future electric vehicles too, suppliers can surely look to strategically scale up to reduce their costs.

 With the safety quotient in both passenger cars and two-wheelers set to rise from these regulations, India should see safer vehicles and hopefully, far fewer fatalities than years before. A significant opportunity is available for suppliers. However, they have to ensure their capacity and resources are in place to deliver on both quantity and schedule, to realize the economic potential that the new safety regulations offer.

Analyst Contacts:

Vinay Piparsania

+91 9971005882

vinay@counterpointresearch.com