20 May 2016

Car Safety In Emerging Markets


I was reading an article about some cars sold in certain emerging nations performing poorly in crash tests. The Global New Car Assessment Programme (NCAP) crash testing authority has requested that four car companies stop selling such cars. Renault, Hyundai, Suzuki and Mahindra received zero star safety scores following a series of crash tests in Delhi, India.

If full safety was included in these emerging nations, prices would rise and sales would fall heavily. That would reduce volume and force prices up still more. David Ward, secretary General of Global NCAP, says it's the car companies that should lift their game. So where should the buck stop with this one? Is it up to car manufacturers? Well anyone should know that won't work. If one car maker gets an advantage, even unfairly, the others have to follow to remain competitive.

Therefore you cannot expect car makers to regulate themselves. They are profit driven businesses that sell what the consumer wants. In emerging markets safety clearly doesn't sell cars, a low price does. So to David Ward and his NCAP organisation, I say you are barking up the wrong tree.

The obvious solution is to suggest to the governments in the affected countries to legislate improvements in car occupant safety. They won't, because they know sales will fall and workers will be laid off. That will reduce taxes earned and also be unpopular with voters. Why would a politician take on a problem that the people don't see as an issue, hurting economic growth and becoming unpopular in the process?

This NCAP initiative seems to be a name and shame exercise, as much to discredit these makes in the West as much as anything. However, car manufacturers give car buyers what they want, in this case, cheap mobility. If the people are happy to buy them and governments won't act, then expecting car makers to 'do the decent thing' is optimistic to say the least. There is regrettably no easy solution to this.

2 comments:

  1. Well said. Personally, I blame neither the car companies nor the governments; it's really the consumers that need to change. It's a case of Maslow's hierarchy of needs... the majority of customers in emerging markets simply cannot comprehend the importance of airbags and ESC... safety is simply not a deciding factor in new car purchases (rather, it's a luxury)... but in time, as the population gets wealthier and more educated, they will naturally demand more safety in cars. But until then, all we can do is to raise awareness on the worrying situation, and to that end, I suppose NCAP and other similar NGOs deserve full-props.

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  2. Thank you for your comment. It too was well said. It wasn't that long ago that cars in the West were very unsafe. Until Ralph Nader came along...

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