Maruti Suzuki may quit the small car market if costs turn unviable, says MS Chairman RC Bhargava

Maruti Suzuki may be forced to discontinue making small cars for the Indian if costs keep rising and become unviable because of government policies, said Maruti Suzuki Chairman, RC Bhargava.

This was in reference to the central government’s policy of making six airbags mandatory for cars. This policy, along with a number of other recent policies undertaken by the government are making vehicles prohibitively expensive and out of reach for the common people.

When asked about the upcoming mandate of six airbags for passenger vehicles being pushed by the central government, Maruti Suzuki’s Charman, RC Bhargava said that the move will end up increasing the price of the cars by a significant margin. Moreover, the measure may not help in effectively tackling the issue of a large number of deaths on Indian roads due to accidents.  

“If the policy becomes such that small cars don’t remain viable, we will discontinue them,” told Bhargava to a leading daily, further adding that Maruti Suzuki doesn’t make any significant profits from the sale of cars in these categories.  

He further adds, “We need to ask ourselves is it a good thing for a country if low-cost cars disappear from the market. The industry will slow down and there will be less employment in the auto sector.”

Central Minister of Road Transport and Highways, Nitin Gadkari has always been an advocate for increased safety in vehicles. In January this year, he tweeted, saying, “In order to enhance the safety of the occupants in motor vehicles carrying up to eight passengers, I have now approved a Draft GSR (General Statutory Rules) Notification to make a minimum of six Airbags compulsory.”

Bhargava shot down criticism that Maruti has reservations around the six airbag policy as it fears that any slowdown in sales from small cars will hurt their bottom line and ultimately their share of the Indian market. He added, “We make more number of bigger cars and are introducing new SUVs now. We will regain the market share (that MS has lost in the last year).”

The Maruti Chairman said that data released by the Ministry of Transport shows that two-wheelers account for 43% of deaths in road accidents while pedestrians for 18%. “Reducing these deaths should be a priority.”  

He said that if small cars get further expensive, the lower-income families would be forced to buy the relatively-unsafe two-wheelers instead of upgrading to cars. “With additional airbags, vehicles will get more expensive and production and sales will go down.  

“Now which is the category of buyers that will not be able to buy cars due to higher prices? It’s the lower end of the market. They will be forced to buy two-wheelers that are less safe. The rich people will continue to buy cars as they have the money,” he added

He also added, “What will happen if the lower end of society doesn’t buy cars? Then they will buy two-wheelers. Will that increase the safety on the roads, or rather decrease it further? Those (two-wheelers) are less safe.”  

He also said that a hit on the sales of small cars will be bad for the Indian economy and the growth of the car market.