Maruti Suzuki Will Discontinue Small Cars If Costs Become Unviable - Govt. To Blame?

When asked by the Times of Indiaabout the upcoming rule change that would make six airbags mandatory for passenger vehicles, Bhargava stated that the move would end up raising the prices of cars in India.

Bhargava stated that if such policies made small cars unviable, Maruti Suzuki would discontinue them. Bhargava told the Times of India that despite claims that such a move could bring down the company, Maruti Suzuki's profits do not actually depend on its small car sales.

Bhargava told the TOI, "Our profits don't depend on small cars. People have a wrong notion. We sell them almost without profits if you look at models such as the Alto." Bhargava instead stated that if small cars disappeared from the Indian market, the car industry would slow down and that opportunities for employment in the sector would also be less."

Bhargava's message does hold true as along with the government's policy changes (BS-VI norms and others) along with rising costs of raw materials have seen carmakers raise the prices of cars multiple times over the previous year.

As of now Maruti Suzuki is the only carmaker to have raised its voice against the upcoming rules that will make 6 airbags mandatory for all new cars from the 1st of October. Maruti Suzuki through Bhargava is also the only carmaker to have objected against the upcoming Bharat NCAP safety ratings.

Installing four more airbags to a car would raise its prices by quite a bit. The addition of the new airbags would also require extra research and development as changes would be needed to the structure of the vehicles to accommodate the new safety features. This in turn would once again lead to increased spending from OEMs who would end up passing the extra cost onto customers. Combine all these increases and prices of cars could go up significantly compared to what they are now.

However, Union Transport Minister Nitin Gadkari seems more than ready to force the changes down the throats of carmakers. Carmakers export versions of the cars they sell in India to other countries across the world where they have to follow stricter safety norms and the minister is adamant that these changes be seen on cars plying on Indian roads.

Thoughts On Maruti's Stance

Maruti has been the only company to publicly air its grievances about the upcoming safety norms. While the company may claim that such changes should not be mandatory, we believe that the Indian customer would rather keep his/her family safe while travelling on the road than worry about the extra cost.