Maruti's Chairman RC Bhargva Talks about Recent NCAP Ratings, & Government Taxation System

Maruti's Chairman RC Bhargava in a recent media interaction said that incorporating NCAP standards in Indian cars have no influence on frequency of accidents on Indian roads. Maruti S-Presso, Ignis, & Swift were given 1-star safety rating by NCAP.

Highlights

1. RC Bhargava in a recent media interaction said incorporating NCAP standards into Indian vehicles would have no substantial influence on the frequency of incidents on Indian roads
2. Maruti has claimed that its products comply with all Indian Safety Laws.
3. The comment came after Maruti Ignis, S-Presso, and Swift were given 1-star safety rating by Global NCAP.

RC Bhargava on 1-star safety rating of Maruti Cars

According to RC Bhargava, Chairman of Maruti Suzuki India, incorporating NCAP standards into Indian vehicles would have no substantial influence on the frequency of incidents on Indian roads. Bhargava, was addressing the media at a year-end meet organised by the premier Indian manufacturer with its senior management team, including Hisashi Takeuchi, MD & CEO, Maruti Suzuki India.

The comment was made in response to a question on the latest Global NCAP testing, which gave three Maruti models – Swift, Ignis, and S-Presso – a 1-star grade for both adult and child occupant protection.

For the record, Maruti has always claimed that its goods comply with all Indian safety laws. Bhargava's answer this time around though was somewhat castigating towards the worldwide testing organisation, which incidentally, he said "was supported to a considerable extent by car component makers like airbags".

Note: It should be remembered that the United States National Highway Traffic Safety Administration (NHTSA) established the first NCAP (New Car Assessment Programme) in 1979 to encourage manufacturers to produce safer vehicles and customers to purchase them.

"NCAP assumes that all regulators throughout the world truly don't know their industry," Bhargava said, adding that NCAP believes it knows its company better than anybody else. However, nobody looks at "why accidents happen in India". When you think about it, Bhargava asked, "shouldn't safety be associated with preventing accidents?"

He cited two primary reasons why India lags behind others: car fitness and the manner in which Indians are issued driver licences. He reasoned that it is not ethical to continue loading automobiles with safety measures while ignoring vehicle and driver fitness.

Lack of vehicle fitness legislation, standards, and certification in India to guarantee cars on the road remain compliant with safety features is a serious worry, he added. The other significant cause of more accidents in India is driver mistake, which stems from the country's lack of basic education, rigorous training, and examinations for issuing of driving licences. "How much does someone who receives a licence know about driving safely and correctly?" he inquired.

According to Bhargava, Maruti has created several safety measures and has invested in the establishment of driving schools equipped with modern simulators. Nonetheless, despite attempts made to get State legislation amended to bring about adequate driving exams before awarding licences, "for different reasons that is not occurring".

His remarks were later supported by Rahul Bharti, Executive Vice President - Corporate Planning and Government Affairs, Maruti Suzuki India, who stated that impressions might be based on "fickle metrics" at times. According to Bharti, Maruti has gone well beyond compliance in several of its vehicles. "We're a firm with brilliant engineers, but not so good communicators," Bharti said.

Uniform Taxation Not Desirable

In regard to the hardship the world was under in the previous few years owing to the pandemic, and the ensuing semiconductor shortages and supply chain bottlenecks, the Maruti Chairman remarked "the worst is behind us". Vehicle sales have increased month after month, indicating a solid recovery. In fact, FY23 is expected to end with the biggest car sales in the country's history.

Despite growth, the business has long been hampered by unfavourable taxation. According to Bhargava, government levies on automobiles put them out of reach for many people in the country. "Government regulations see vehicles as luxury items that must be substantially taxed," he explained. This is one of the reasons why industry growth has slowed to 3% from 12% over the last 12 years, according to Bhargava.

While pushing for the rationalization of all motor vehicle taxes in India, which have historically been among the highest in the world, Bhargava stated that taxation should be addressed in the same manner as it is in the rest of the world.

"With 50% taxation, you can't expand an industry," he remarked. It should be noted that the GST Council has approved a unified definition for SUVs across all states. It said that all automobiles with engine capacities greater than 1,500 cc, lengths greater than 4,000 mm, and ground clearance greater than 170 mm will be subject to a 28% GST and a 22% cess, bringing the effective tax rate to 50%. At the moment, all autos are taxed at 28% GST, with an extra cess ranging from 1% to 22% depending on the kind of vehicle.

According to Bhargava, taxes should not be the same for different types of vehicles. A unified tax structure across all vehicle classes, he added, will not bode well for the sector's future.

"The weight of regulatory changes on the tiny automobiles is significantly higher than the regulatory load on big cars and that is affecting the overall market behaviour. People who buy little automobiles do not buy them in quite the same quantities. Personally, I believe it is not beneficial for the automobile sector or the country," Bhargava added.

Having said that, Bhargava does not anticipate a scenario in which the small vehicle market has no growth and all development occurs in the upper categories. The regulatory influence on the automobile is an essential issue to consider, and "that's one rationale for not having a consistent rate of tax on all small and large cars," according to Bhargava.

Conclusion:

Meanwhile, Takeuchi, who became the company's new Managing Director and Chief Executive Officer on April 1, 2022, stated that he does not yet know which path to the future is preferable. Nonetheless, he believes in the objective of providing people with the joy of mobility in a sustainable manner. This would involve efforts to reduce CO2 emissions not only from the automobile itself, but also from actions implemented across the value chain, such as manufacture, distribution, and sales.

He is dedicated to taking any and all steps necessary to achieve India's stated goal of becoming carbon neutral by 2070. "We'll attempt to identify all conceivable CO2 reduction technologies," Takeuchi stated.

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