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Increased safety regulations may double air bag demand by 2011

November 23, 2010
As stricter regulations move vehicle manufacturers toward making vehicles safer in side-impact collisions, the demand for air bags in North America will nearly double by 2011, a new J.D. Power and Associates study found. According to the 2004 Global Automotive Airbag Market Study, released Oct. 6, much of the growth in the air bag industry is the result of the National Highway Transportation Safety Administration's demand that all vehicles sold in the United States by 2009 must pass a side crash test that measures the impact to head, thorax and pelvis. The study finds that the increasing demand for air bags, particularly side-impact airbags, will contribute to an additional 33 million units in North America by 2011. This will result in an extra $1.17 billion in revenue potential for air bag suppliers. "A significant increase in demand for air bag modules will be felt both domestically and abroad as a result of more government regulations, consumer demand for safer vehicles, and a general increase in vehicle production volumes," said Anthony Pratt, senior manager forecasting for J.D. Power. "While this creates a tremendous opportunity for growth among airbag suppliers, the added costs may be passed on to the consumer, increasing the price of vehicles." The study finds that global demand for air bag modules is expected to increase by 91.9 million units by 2011, resulting in an additional $2.9 billion in global air bag revenue. While the growth will be greatest in North America, Asia and Europe are close behind with an expected demand increase that will result in an additional $1 billion and $763 million in revenue potential for suppliers, respectively, by 2011. "Unlike North American and European demand, which focuses heavily on an increase in side-impact modules, more than one-half of the anticipated revenue growth in Asia is taking place in driver and passenger air bag models," said Pratt. This is primarily due to increased vehicle production volumes and an increased demand for safer vehicles in Asian countries outside Japan, where many vehicles still do not include air bags." The study is based on vehicle forecasts generated by J.D. Power-LMC global forecasting, as well as consumer feedback, contacts within the supplier community and regulation announcements made by governmental safety agencies such as the NHTSA.
 

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