Safety rules pave way for Rs.6,500 cr ABS market

April 03, 2016 12:00 am | Updated 05:42 am IST - CHENNAI:

Growing awareness about safety features in vehicles and new rules are expected to drive strong growth for ABS (Anti-lock Braking System) market in India and the business opportunity is pegged at Rs.6,500 crore over the next three years for the auto component industry, according to industry representatives and analysts.

Safety concerns and likely implementation of mandatory crash test for passenger vehicles will further drive demand for ABS in passenger vehicles. Many passenger vehicle makers have already started providing ABS as well as airbags in most of their models. Also, With ABS becoming mandatory in 125cc+ two wheelers from April 2018, the domestic ABS market will witness exponential growth, according to Subrata Ray, Group Vice President – Corporate Ratings, Icra Ltd.

“At present, ABS penetration is estimated at 30 per cent in passenger vhicle segment and sub-5 per cent in two wheeler segment. In the backdrop of implementation of safety regulations, the addressable ABS market will be about Rs.6,500 crore by 2019,” Mr. Ray added.

This will be a welcome opportunity for the component makers, who have been under stress due to fragmented recovery in the vehicles market. Companies such as Bosch, Continental, Wabco as well as home grown majors like Brakes India are likely to be key beneficiary of making ABS system mandatory for 2W and passenger vehicles.

The safety content per vehicle in India is reported to be one of the lowest in the world with relatively low sensitivity towards consumer safety.

“Currently, the estimated content remains at about $300 per vehicle, much lower than that in western, eastern Europe and North America, which are at $3,000, $500 and $1,000 per vehicles, respectively,” according to auto analysts at ICICI Securities.

“Thanks to introduction of safety systems such as ABS and AMT (automatic manual transmission) in Europe, the number of fatal accidents on roads fell by more than 50 per cent over the past two decades despite significant increase in number of vehicles on the roads,” Jacques Esculier, global Chairman and Chief Executive Officer of Wabco, had told The Hindu .

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