What does it cost to build cars with good NCAP ratings?

While addressing an event in Mumbai last month, Union minister for road transport and highways Nitin Gadkari said that the government was really concerned about over 1.5 lakh deaths on Indian roads every year. He also said that over 60% of those dying in those accidents are young, in the age group of 18 to 34.

Gadkari’s comments came just days after Cyrus Mistry’s death in a road accident in Maharashtra. The death of the industry tycoon had triggered a debate around road safety in the country. A few days later, the government reportedly decided to make six airbags compulsory in all the passenger cars. But, later, it extended that deadline till October next year. A decision which Maruti welcomed.

While addressing another event, Union minister Gadkari claimed that the cost of increasing one airbag in a vehicle can be as low as Rs 900. He said that the argument that addition of new airbags will significantly increase the price of economy cars was nothing but “fraudulent”.

For long, brand value, mileage and price have been playing a key role in deciding the fate of cars in the Indian market. Safety ratings usually took a back seat. But, things are changing for the better now with an increased awareness about safety. Automakers too are getting serious and working to improve safety features in the car.

Tata Motors is leading the market in getting their cars tested from global NCAP, which is a common practice followed by many leading global automakers. NCAP is a safety assessment program that evaluates cars on various safety parameters.

While different regions and countries have their own NCAP programs, a Global NCAP is an agency to enhance cooperation between various NCAPs and promote vehicle crash testing in emerging markets. The star rating will be assigned to cars based on the scores achieved in various parameters. The global NCAP conducts front and side impact crash tests and the cars will be evaluated on various assessment tests such as child and adult occupant protection.

When Tata was trying to make a comeback, its play revolved around safety. Tata Motor's hatchback, Tata Nexon was the first made-in-India car to bag Global NCAP’s five-star crash test in 2018, followed by Altroz. Tata Punch, the sub-compact SUV whose prices start at Rs 5.93 lakh, secured 5- star and 4-star crash test ratings for adult safety and child safety ratings, respectively. Tata didn't respond to mail sent out by Business Standard on the issue.  

Puneet Gupta, Director, S&P Global Mobility says, it depends on the consumer that you are serving. Tata really wanted to make a strong comeback and safety was one of the trump card.

Other carmakers like Mahindra too have got their cars tested for safety ratings. For instance, the Mahindra XUV700 got the 5-star crash test rating for adult safety. It has also received a 4-star crash test rating for child occupant safety. Similarly, Mahindra’s XUV300 too bagged 5-star crash test rating for adult safety and 4-star for the child.

Some automakers like Maruti, which caters mainly to the rural India and price-sensitive market, have stayed away from Global NCAP ratings. The company earlier said it meets all the safety norms under the Indian regulations and does not have to meet the requirements of independent organisations like Global NCAP.

Some experts say Maruti doesn’t want to hurt its niche consumer with price burden as meeting Global NCAP ratings means a jump in prices. Even when the government approved the draft of Bharat NCAP ratings, which is based on global NCAP, Maruti Suzuki chairman RC Bhargava said it would go for the Bharat NCAP “star rating” for its vehicles only if the customer shows a preference for the mechanism. Maruti did not respond to mails sent for their comments.

Made-in-India cars currently follow the regulatory crash test speed of up to 56 kmph as part of the Automotive Indian Standards (AIS). If Bharat NCAP ratings, which require cars to be crash-tested at 64 kmph, get notified and take effect from April 1, 2023, and automakers like Maruti Suzuki choose to get their cars rated for safety, it will mean manufacturers will have to add to the structural strength of their models and make a host of other changes to ensure a good rating.

Such a move could lead to an increase of Rs 10,000-Rs 15,000 in material costs alone. Accounting for other safety features, such as airbags, the overall cost is likely to jump further.

Interestingly, according to a Business Standard report, while models with good GNCAP ratings – Mahindra XUV700 being the latest – have become a talking point for auto companies, even bad ratings – a zero rating for bestselling models such as the Alto and Baleno – haven’t had an impact on their volumes. They continue to top the sales chart in their respective segments. This indicates that while there is a growing awareness among buyers about vehicle safety, it does not feature in the top five car-buying decisions.

Some argue that if one brand with a budget car like Punch can get NCAP safety ratings, why cannot the other brand with offerings in the same price range get the ratings. Let us hear from Puneet Gupta of S&P Global Mobility.

Speaking to Business Standard, Puneet Gupta, Director, S&P Global Mobility says, Maruti is following Indian safety standards. Maruti’s focus is more on other parameters like mileage, whose loyal customer is from a smaller city

Since carmakers like Maruti cater to a range of customers with a wide portfolio, their focus might be to offer a perfect value for proposition, where other parameters like mileage might be paramount. With customer’s growing awareness on safety, experts say rules on safety ratings should come from the government and not independent agencies.