Carmakers hit as RTO red flags Ola, Uber cabs without speed governor

Last year, taxis and cab aggregators accounted for 9% of total car sales

Carmakers’ sales to fleet owners and cab aggregators such as Ola and Uber have come to a halt in top markets like Delhi, Mumbai, and Chennai.

The road transport offices (RTOs) in these and some other cities have stopped registering taxis without the speed governor following a notification by the Union road transport ministry early this month.

The notification mandates taxis to have the speed governor, which restricts speed to 80 km per hour and helps in controlling fatalities arising out of crash accidents.

Of the three million passenger vehicles sold in the domestic market last year, nine per cent is estimated to have come from sales to fleets and cab aggregators. The share varies from company to company. The country’s largest carmaker, Maruti Suzuki, is estimated to get about six per cent of its sales from cab aggregators.

“Registration of vehicles in the taxi and cab segments is facing issues. Earlier, the rule of the speed governor was for only commercial transport vehicles. Now taxis have also been included. It is affecting everybody,” said Jnaneswar Sen, senior vice-president (sales and marketing), Honda Cars India. 

The Amaze, Honda’s compact sedan, gets close to one-fifth of volumes from the taxi segment.

The Union ministry of road transport had mandated the speed governor for heavy commercial vehicles in August 2015 but it exempted lighter vehicles used as taxis and cabs. An order of the Karnataka High Court early this year termed the exemptions illegal, following which the ministry came up with a fresh notification early this month to provide for this addition in the Central Motor Vehicle Rules. 

Subsequently transport commissioners in various states issued orders to RTOs to register only such cars as taxis that have the speed governor. 

The industry is learnt to be in discussion with the ministry to seek a postponement. “The carmaker has to fit the speed governor. The procurement and fitment could take time as we were not prepared for this sudden requirement. There will be some impact on sales,” said an official at Hyundai. 

The company’s Xcent sedan gets large volumes from the taxi segment. Many taxi associations are opposing the decision as the speed governor means an additional cost of almost Rs 10,000. 

Road accidents in the country are estimated to have taken 146,000 lives in 2015. An analysis of the accident data reveals that about 1,374 accidents and 400 deaths take place every day on Indian roads and this translates into 57 accidents and loss of 17 lives on average every hour. 

Among other initiatives, the government has mandated the use of air bags in all new cars that will be launched from October this year and imposed crash test norms on vehicles.

Coming to a halt

• Regional transport offices (RTOs) in Mumbai, Delhi and Chennai have stopped registering vehicles without speed governors
• More states could stop registration
• Purchases of fleet owners and cab aggregators impacted
• Sales of Maruti Suzuki, Hyundai, among others, to the taxi segment hit
• Companies seek postponement of the order’s implementation