Increasingly stringent vehicle safety mandates and consumer demand for additional safety features challenge automakers as they seek to develop cost-effective, value-added safety offerings, while maintaining profitability and market share in India’s highly competitive automotive industry.
Government mandates, paralleled by rising consumer awareness, are injecting new momentum into passive and active safety systems for the Indian passenger car market. The Bharat New Car Assessment Program (BNCAP) with its stringent “star based” rating for crash safety which has been in effect since April 1, 2023, and the emergence of vehicle safety as a key decision-making factor in vehicle purchase is boosting the growth of this mature market. Accordingly, Frost & Sullivan projects overall market revenues— covering passive safety solutions such as airbags, seatbelts, seatbelt reminder (SBR) systems, speed warning systems (SWS) and active safety solutions including anti-lock braking systems (ABS), electronic stability programs (ESP), and electronic brakeforce distribution (EBD) systems—to swell from $2.40 billion in 2022 to $3.64 billion in 2030.
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Laying the Groundwork for Advanced Driver Assistance Systems
The Automotive Industry Standard (AIS) 145 makes it mandatory for all vehicles sold in India to include airbags, SWS, SBR, and ABS. The recent introduction of AIS 197: BNCAP with its stricter crash testing norms is poised to catalyze the uptake of passive and active safety, laying the groundwork for advanced driver assistance systems (ADAS) becoming a mandatory requirement in the future.
Regulatory compliance will mean that safety features previously restricted to premium passenger vehicles will soon be available in mass market models as well. In the premium segment itself, more safety features are being incorporated. For instance, side airbags in the rear seat have become increasingly commonplace. Meanwhile, reflective of consumer demands, automakers are incorporating value-added features – for instance, ABS and EBD together with ESP, rather than ABS and EBD alone – at lower additional costs.
Multiple Products Get a Push from Safety Regulation
The steady, organic growth of Indian automotive sales and higher passive safety feature adoption are set to galvanize the passenger vehicle safety systems market. The market is already mature due to regulations like AIS 145. Revenue growth will derive from higher airbag adoption. Airbags are expected to continue to generate the highest revenues in the passive safety segment since it will be necessary for OEMs to offer more airbags to meet evolving cash testing norms. Revenue growth will also be reinforced by ESP penetration in lower vehicle segments. Also, revenues will not be generated by increased system costs but rather from volume growth as more vehicle sales in the Indian market will mean more demand for safety systems from OEMs.
To add value, automakers will offer EBD systems on almost all vehicles equipped with ABS. As a result of regulations mandating ABS, EBD, airbags, SBR, and SWS, there are unlikely to be any major cost variations in these systems. An ESP mandate is expected in 2028. This, together with the second phase of BNCAP’s crash testing norms that is expected to come into effect in 2028, will make it challenging for OEMs to achieve five-star ratings without integrating additional safety equipment. Such trends will bolster market prospects.
Passive Safety Systems Take the Lead
Passive safety systems are forecast to account for a substantial part of overall market revenues due to the fact that vehicles are already equipped with much of the hardware required for active safety systems.
AIS 145 has mandated front passenger airbags since 2019, with further growth coming from the need for OEMs to achieve high safety ratings in crash testing as required by AIS 197: BNCAP. In this context, a good rating will depend on the impact prevention provided by airbags. Regulatory compliance will also underpin the need for OEMs to install seat belts in all their vehicles. Similarly, AIS 145 mandates requiring front driver and passenger SBR will mean vehicles will have no choice but to include SBR. Today, while not mandatory, most OEMs already offer SBR for all seats, including the rear, as standard in most of their models. Again, AIS 145 mandates will compel OEMs to outfit their vehicles with SWS. In short, growth in the passive safety segment will be propelled by regulation.
Active Safety Systems Receive Regulatory Push
The active safety segment will be driven by a potential mandate on incorporating ESP as a standard in vehicles. At present, OEMs do not offer ESP across all variants, but this trend is changing. An increasing number of automakers is offering ESP as standard on all models. This has been motivated by BNCAP making it mandatory for OEMs to incorporate ESP for their vehicles to receive a 3-star rating or higher. By 2026, all OEMs will offer ESP as a standard.
Overall growth rates in the active safety segment are likely to lag behind its passive safety counterpart. This is because both ABS+EDB and ESP are mature technologies. But, here again, AIS 145 mandates will play a pivotal role in boosting growth as it will require automakers to install ABS into all their vehicles.
Frost & Sullivan Perspective
On the one hand, government mandates will require automakers to incorporate safety features in vehicles. This will align with consumer demands for cars with enhanced safety profiles. On the other hand, in a highly competitive and cost-sensitive market, automakers will be challenged to provide additional safety features at a cost-effective rate, while maintaining their market share and profit margins. Effectively addressing all three key agendas—regulatory compliance, consumer demand for reasonably priced, value-added safety features, and ensuring continued profitability—will require collaboration across the ecosystem.
Automakers will need to strategically partner with Tier I suppliers to provide economical solutions and, simultaneously, focus on developing safety enhancing ADAS. Trends suggests that L0 will be leapfrogged altogether, with a direct jump to L1 or L2. The likes of Mahindra in XUV700, Tata in Harrier and Safari, MG with Astor, Hector and Gloster, Hyundai with Creta and Kia with Seltos and Sonet already offer L1 or L2. According to Frost & Sullivan analysis, the most likely scenario will play out like this: vehicles in the C segment and above will jump to L2 directly. Below this segment, OEMs will offer L1 but only for a limited period. By the turn of the decade, every OEM will offer L2 barring perhaps the usual suspect, Maruti Suzuki.
With inputs from Amrita Shetty, Senior Manager – Communications & Content, Mobility