[TusharK]

R C Bhargava, Chairman, Maruti Suzuki, has said that the company could discontinue its small cars if they become unviable due to rising costs, as a result of the government’s policy interventions.



The statement comes in the wake of the government’s decision to make 6 airbags mandatory in all cars. The move is expected to increase the prices of cars. Bhargava stated that the company doesn’t make any significant profits on small cars, making them unviable with an increase in costs.

According to Nitin Gadkari, Minister for Road Transport & Highways, India has barely 1% of the vehicles across the globe but records 10% of the world’s road deaths. The 6 airbag norm was proposed with an aim to make Indian roads safer.

Source: ET Auto

Link to Team-BHP News

[karthikrao23]

It can be blamed on the Indian mindset. They don’t want safety, but only check features like sunroof etc. We deserve substandard products only.

[kushagra452]

New cars will soon be out of reach for many Indians. The used car market is where a lot of the action has already shifted. With entry level hatchbacks crossing 5L OTR, one needs to think long and hard about a new purchase.

[furyrider]

Originally Posted by TusharK

R C Bhargava, Chairman, Maruti Suzuki, has said that the company could discontinue its small cars if they become unviable due to rising costs, as a result of the government’s policy interventions.

For once, I would agree with Mr. Bhargava on this one. A top-end B-segment hatch costs almost 10 lakhs on-road now. Even A-segment cars have started touching 6-7 lakh on road. The prices are insane.

While this statement was made in the context of the 6-airbag mandate, I would also like to point out the insane amount of taxes the government collects as direct, indirect and tax on tax (road tax on already taxed ex-showroom price) on every vehicle sold in this country - almost to the tune of 40-50% of the on-road price combined.

Cars are no longer a luxury in this country. With increased travel and poor public transport, we have reached a situation where having a car has become a necessity rather than to show off one's wealth. Rising costs of raw material are not helping matters either.

[drift87]

I would respect the manufacturer's decision to prioritize safety over costs. The increase in cost of manufacturing is a perpetual phenomenon. What's imperative is increasing the spending power of people, which is beyond the scope of this thread.

[lordrayden]

This is a negotiating tactic, plain and simple. He doesn't want the Bharat-NCAP to be made mandatory nor does he want 6 airbags to be compulsory.

I say, let very small cars skip the 6 airbag rule, but make the NCAP test mandatory and let the market decide based on the results. If people still want to buy Maruti's small cars inspite of the bad safety ratings, then they have made an INFORMED decision. Thats fair.

On the other hand, if people shy away from unsafe small cars, then the market has spoken and Mr Bhargava will have to eat his words and make his cars safer to remain competitive.

[AJ56]

The gov. shouldn’t be in the business of mandating anything safety related in cars, let the free market decide what safety features it is willing to pay for and not pay for, forcing people of limited financial means to buy safer cars by arbitrarily raising the cost of production is not in line with a free market society.

[Rodo_Faita]

Originally Posted by TusharK

India has barely 1% of the vehicles across the globe but records 10% of the world’s road deaths.

Also, due to poor urban planning, poor road infrastructure, poor traffic management, public encroachments, government neglect, these 'barely 1% vehicles' manage to cause chaotic traffic.

Originally Posted by TusharK

Maruti Suzuki, has said that the company could discontinue its small cars if they become unviable due to rising costs

Buy a preowned small car and save hard-earned money.

[ishan12]

Originally Posted by AJ56

The gov. shouldn’t be in the business of mandating anything safety related in cars, let the free market decide what safety features it is willing to pay for and not pay for, forcing people of limited financial means to buy safer cars by arbitrarily raising the cost of production is not in line with a free market society.

Going by the same logic, I guess government should also not be in the business of mandating anything safety related in airplanes too, and the onus should be on the passengers to study each airline and pick the safe one, or fly cheap in an unsafe airline? Should the same logic apply to hospitals and pharma industry too? Or even to restaurants and eateries, where people should be free to decide if the place is safe to eat. I guess even theaters and malls also should be free to decide if they should keep any fire safety equipment and let patrons decide of they want to visit or not.
If we apply same to 2 wheelers, then helmet should also not be mandatory because it increases the total cost of ownership of a motorcycle and let the rider decide if he wants to wear it.

We can debate on weather six airbags mandate is good for the industry or not, but safety, as mandated by government policies and regulations has nothing to do with free market economy. You are mixing 2 different things here.

[Livnletcarsliv]

Now the cat is trying to come out of the bag.

Rising costs and newer safety norms are applicable across the brands, across the globe, across the industries. So this cannot be an excuse at all.

This is a roadmap from Maruti to move ahead with better products (especially in collaboration with Toyota) so that they don't want to be branded as tin cans anymore and loose market share as well. Nice tactics and market strategy from Bhargava. I definitely want them to be successful as I always wish and wanted better products from Maruti that are safer, built better, perform better.

So be it Bhargava. We (I) don't want cheap cars.

[sreejithkk]

I still feel the cost of adding 4 additional airbags won't be more than 1 Lakhs, comparing the existing price difference of the variants that comes with 6 airbags. Also I do not see any issue with Bharat NCAP being made mandatory. It will help the people to make an informed decision rather than assuming an untested model as safe or unsafe just by comparing sheet metal thickness. Even with zero star rating, the S-Presso has more takers than Kwid. With 2 stars, Wagon R sells more than 4 star rated Tiago. R C Bhargava should understand that Bharat NCAP would rather do more good to Maruti than Bad. Till GNCAP tested Brezza, most people considered all Maruti car as unsafe tin cans, however Brezza's GNCAP result changed that perception. So if other models scores similar/better result than immediate competitor (like Swift and grand i10 scored similar result, despite generic perception was Hyundai is having better build quality), it would do only good to them.

[sukhbirST]

If Maruti decides to leave small car market , others will be glad to take over. In the market not every product is there to make money. This is true across the industries where there is a bit of cross subsidy. Safety should not be compromised at any cost.

[lordrayden]

Originally Posted by AJ56

The gov. shouldn’t be in the business of mandating anything safety related in cars, let the free market decide what safety features it is willing to pay for and not pay for, forcing people of limited financial means to buy safer cars by arbitrarily raising the cost of production is not in line with a free market society.

I would argue that the middle path is the best. Sometimes the free market needs a nudge from the hand of the Govt to do what is RIGHT.

Up until the govt mandated ABS from April 2019, even some mid-market cars wouldn't offer this absolutely essential safety feature across all variants. I remember that many cars would only offer ABS in the top variants with the sticker "ABS" marking proudly displayed on body somewhere. A similar nudge was required for driver and passenger airbags, which would also be considered essential safety features.

But with the 6-airbag rule, the pendulum has swung too far in the other direction and the Govt has "nudged" a bit too hard. Most people agree that without a sound structure, the additional airbags don't offer too much of a benefit.

[AJ56]

Originally Posted by ishan12

Going by the same logic, I guess government should also not be in the business of mandating anything safety related in airplanes too, and the onus should be on the passengers to study each airline and pick the safe one, or fly cheap in an unsafe airline? Should the same logic apply to hospitals and pharma industry too? Or even to restaurants and eateries, where people should be free to decide if the place is safe to eat. I guess even theaters and malls also should be free to decide if they should keep any fire safety equipment and let patrons decide of they want to visit or not.
If we apply same to 2 wheelers, then helmet should also not be mandatory because it increases the total cost of ownership of a motorcycle and let the rider decide if he wants to wear it.

We can debate on weather six airbags mandate is good for the industry or not, but safety, as mandated by government policies and regulations has nothing to do with free market economy. You are mixing 2 different things here.

Yes to all of your points above, if airlines or movie theatres stop safe practices and remove safety equipment to cut costs, you will see an increase in fatality/injury from plane crashes and fire accidents at theatres respectively, causing these companies to lose business, no sane company will cut costs if it results in a loss of sales as patrons will leave them for safer options. Read up on Milton Friedman to fully understand the argument being made.

With regard to helmets, yes absolutely it is of no business of the government to ensure a riders safety. That is their personal decision, not the States, otherwise why stop at helmets? By this logic we should be mandating gloves, body armour, SNELL and DOT certified helmets, fire retardant inner wear, the list is endless.

I’m all for safety (don’t even drive without rear passengers belted up) but I’m not for mandating safety as that raises costs and is therefore directly related to a free market economy.

[shashi792]

Tata has shown how a car can be small and safe. Mr. Bhargava has been known for his controversial remarks. From the profitability perspective of a company, he is correct. But, govt policymakers cannot think about profitability. Its companies head-ache to book profits either playing a volume game or unnecessary expense game.