Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Opinion / Blogs/  What Algeria did to auto makers that India could not
BackBack

What Algeria did to auto makers that India could not

The African nation has taken a strong stand in barring car makers from dumping their stripped-down and unsafe models in front of its people

Algeria’s government has prohibited citizens from buying imported cars that are not equipped with safety features such as airbags, anti-lock wheel ABS, electronic stability control and cuise control. Photo: AFPPremium
Algeria’s government has prohibited citizens from buying imported cars that are not equipped with safety features such as airbags, anti-lock wheel ABS, electronic stability control and cuise control. Photo: AFP

In April, auto makers from Japan, Europe, the US and India sent out an SOS to their country’s respective embassies in Algiers, upset that the Algerian government was deliberately creating so-called “technology barriers" to bar imports of automobiles.

The local government prohibited citizens from buying imported cars that are not equipped with safety features such as airbags, anti-lock wheel ABS, electronic stability control and cuise control. Such a move meant foreign auto makers will have to adhere to local norms and consequently have to raise prices of the vehicles.

Higher prices of cars sold by foreign auto makers will also mean they will be at a distinct disadvantage compared with cars sold by a joint venture company between the Algerian government and the French auto maker Renault SA, which aims to manufacture 25,000 cars in Algeria and later scale it up to 75,000 in a year.

Algeria’s restrictive agreement with Renault also bars other manufacturers from building automobile factories for the next four years.

The Indian ministry of commerce, on the basis of the inputs received from the Indian embassy, has promised to take up the issue with the Algerian government, a person directly involved in the matter said. “If needed, they will send a delegation to Algeria for negotiations," this person said, requesting anonymity.

The safety features that the Algerian government has made mandatory are standard in cars sold in most countries that have taken up the issue with the north African country. India is an exception.

So far, almost 10% of the cars sold in the country are made in India, making it a significant export market. Spain leads with 25% market share followed by Romania at 12%.

In its notification to the importers, Algeria said if cars brought to the country are not in compliance with the new rules, then they will not be discharged and hence remain on the vessel.

The notification also says eventually “the vessel may find itself carrying the cars to an alternate destination, even possibly back to their point of origin."

Car safety is also a burning topic in India.

Last year, the UK-based vehicle-testing agency Global New Car Assessment Programme (GNCAP) said many cars such as Maruti’s Swift hatchback and Nissan Motor India Pvt. Ltd’s Datsun Go are unstable and they may increase the “probability of life-threatening injuries" in case of an accident.

The agency had given zero-star adult protection ratings to India’s top-selling car models including the Maruti Alto, Tata Motors Ltd’s Nano, Volkswagen India Pvt. Ltd’s Polo, Hyundai Motor India Ltd’s i10 and Ford India Pvt. Ltd’s Figo. Volkswagen has since decided to offer the Polo in India with two airbags as standard. This model subsequently received a four-star safety rating.

Yet, auto makers are reluctant in making safety features standard across models. That will jack up the prices, which may lead to a momentarily dip in demand. Needless to say, the Indian government too lacks the will to take a step as strong as the Algerian government.

The African nation has taken a strong stand in barring car makers from dumping their stripped-down and unsafe models in front of its people. Shouldn’t the Indian government do the same? Its citizens certainly deserve better.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 14 May 2015, 06:33 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App