“The airbag industry is one of the fastest growing auto component segments and is expected to benefit from the increase in content per vehicle arising from higher regulatory requirements and voluntary increase in the number of airbags per vehicle for enhancing safety," Icra said.
“The mandatory content per vehicle for airbag manufacturers is expected to rise from Rs. 3,000-4,000 currently to Rs. 8,000-10,000 by October 01, 2023. The average number of airbags per car sold is about three currently, and this is expected to increase significantly post the mandatory implementation of six airbags per car from October 01, 2023," said Vinutaa S, Vice President and Sector Head, Icra.
Icra said earlier only one airbag per car (driver airbag) was mandatory. This was increased to two (dual front airbags) for category M1 vehicles (vehicles that can seat up to eight passengers and weigh less than 3.5 tons) manufactured from January 1, 2022.
For M1 category vehicles that are going to be manufactured from October 1, 2023, two side airbags and two side curtain airbags have been mandated, for preventing torso injury for people occupying front row outboard seating positions and prevent head injury for people occupying the outboard seating positions.
Vinutaa said that the cost for OEMs can increase further depending on modifications required in cars’ structural changes and deployment of additional sensors.
“Capacity building in the next one year is critical to meet regulatory requirements in a timely manner. Several players have started undertaking capacity enhancements in the last 6-8 months to gradually scale up their facilities, and ICRA expects a capex of Rs. 1,000-1,500 crores in the next 12-18 months for capacity enhancements and localization measures," she added.
Icra pointed out that the inflator forms about 50% of the total airbag cost, while cushion and other components form the remaining.
The industry currently imports 60-70% of its components primarily from overseas parents/joint venture partners, stemming from the lack of indigenous technological capability and absence of adequate volumes.
‘’Unless there is adequate backward integration for the incremental airbags expected to be produced, the import content would only increase further going forward,‘’ Icra said.
