As India is making stricter road safety rules aimed at improving one of the world’s worst road-safety records, the world’s largest air bag suppliers are setting up plants and ramping up capacity, eyeing a $2 billion opportunity in the country.
In India, a person is killed in a road accident every four minutes – 141,000 in 2014. Despite this, less than a third of the 2.6 million cars sold each year have air bags in this cost-conscious market.
But a planned law that will impose crash test standards by 2017 is creating an opportunity for makers of safety equipment, as cars without air bags will achieve only the lowest safety ratings after tests. That, for the first time, will force consumers to directly consider the risks they run by buying cheap.
By 2020, overall revenues from airbag sales in India are set to rise 11% a year to hit $2 billion, outpacing the 9% growth expected in China, according to data from Transparency Market Research. By then, India is expected to be selling over 5 million cars a year.
Some of the world’s largest air bag makers – Autoliv Inc, Takata Corp, TRW Automotive Inc and Toyoda Gosei Co – are already gearing up to cash in.
Airbags in India are expensive, mainly because most of the parts, such as inflators, are imported. And without rules imposing their use in a country of poorly maintained vehicles and overcrowded, badly lit, potholed roads, carmakers often opt not to add a costly component that could drive up prices.
The new rules, part of the Road Transport and Safety Bill, do not directly propose airbags, but instead make crash tests mandatory for new models sold in India from October 2017. The new rules will be discussed in India’s upper house of parliament this year before they become law.