July 13, 2018
A recent business case out of the Moore School, titled “Made-in-India Cars: When Safety Isn’t a Priority,” showcases the often stark differences between safety standards of cars made by the same manufacturers but in different countries.
The case, written by international business professor Wolfgang Messner and Master of International Business (MIB) student Katherine C. Wilson, was published by SAGE Business Cases earlier this spring. By looking at the 2017 Global NCAP crash test results in India, the pair were able to examine consumer requirements, product design and the ethics of doing business in emerging markets.
“Automobile manufacturers that produce cars earning high safety ratings elsewhere in the world are producing cars with minimal safety precautions in India,” Wilson said of their findings. “For example, the car manufacturer Renault has models that score five stars according to Euro NCAP ratings, yet in India some of its car models lack basic safety qualities and score as low as zero according to India NCAP crash test results.”
Models without airbags from other car manufacturers such as Chevrolet, Ford, Hyundai, Mahindra, Suzuki Maruti and Tata also failed the NCAP crash tests.
Messner wanted to conduct the study in the first place because he was riding in a Renault car in India a few years ago and discovered the discrepancy between the company’s safety ratings in India and those in the U.S.
“I expected an international company to have a market standard across countries,” he said.
Their findings raised ethical questions, but not quite the ones you might think.
“In India, nobody is concerned about car safety,” Messner explained. “Many people don’t even realize what an airbag can do for them.”
So instead of charging higher prices for cars with airbags that the people of India don’t necessarily want to pay for, some manufacturers simply don’t install airbags in their Indian cars.
“In India, people care more about the DVD systems in the back seats to entertain themselves while their cars are driven by their personal drivers,” Messner said. “It’s a difference in culture.”
What then is the solution when people don’t recognize the value of safety? Education.
“It’s a slow process of change,” Messner said. “If you think about, when seatbelts first came out, it took a little while to create awareness, but now they’re widely used.”
Messner’s hope is that studies such as this one, one of the first of its kind on airbag product safety in an emerging market, will bring about this awareness sooner rather than later.
By Madeleine Vath