New crash test regulations adopted by the National Highway Traffic Safety Administration are expected to be a boon for airbag manufacturers, and will likely double the volume of airbag sales as the regulations are phased in over the next several years.
NHTSA announced new regulations in September that require all cars and light trucks meet a new “dynamic pole” test by September 2012. The test replicates the damage to a car crashing sideways into fixed objects such as telephone poles, lampposts or trees.
The new regulations require automakers to meet greater head and chest safety standards, which the agency says will lead to the installation of both side curtain and torso airbags.
According to NHTSA, side-impact crashes account for 28 percent of all fatalities, the majority of which involve a brain injury. NHTSA estimates that the new requirements will save more than 300 lives and prevent nearly 400 serious injuries a year.
Currently, only about half of all new cars and light trucks are equipped with side airbags, said Ray Pekar, director of investor relations and business development for Stockholm-based Autoliv Inc., whose North American headquarters is in Auburn Hills.
“So, you are going to more than double that volume by 2013,” Pekar said.
The three main global airbag suppliers are Autoliv, Livonia-based TRW Automotive Holdings Corp. and Tokyo-based Takata Corp.
Autoliv’s North America headquarters is in Auburn Hills and TK Holdings Inc., a division of Takata, is also in Auburn Hills. Collectively, those three suppliers account for about 75 percent of worldwide airbag and occupant safety system sales, Pekar said.
Suppliers that account for most of the remaining 25 percent of the global market include Key Safety Systems Inc., Sterling Heights; Delphi Corp., Troy; Nihon Plast Co. Ltd., Shizuoka, Japan; and Nagoya, Japan-based Toyoda Gosei Co. Ltd., which has its North American headquarters in Troy.
“In North America, my analysis shows that Autoliv, TRW and Takata are about the same size,” said Alby Berman, vice president of marketing and public relations for Takata.
Delphi Corp., with about $1 billion in occupant safety system sales in North America, is a major player here, Berman said, but is not a significant player in other parts of the world.
Most airbag manufacturers also make seatbelts, steering wheels and related electronic products for automobiles. All told, the total worldwide market is about $16 billion to $17 billion.
But while the number of side airbags sold for North American vehicles is likely to double, the money spent by automakers may fall short of doubling, Pekar said.
Autoliv estimates that sales of side airbags for cars in North America will be about $1 billion this year and estimates that the new crash test standards will expand the market by a little less than $1 billion.
Those calculations are based on 15 million cars being sold annually in North America with side curtain airbags costing about $100 on average and chest airbags costing about $40 and a projection that those averages will fall slightly because of technological advancements and pricing pressure.
Takata’s Berman agrees.
“Pricing is continually being pushed down by the customers,” he said. “They look at everything as a commodity product. But there is a lot of technology in airbags.”
Currently, Autoliv North America Inc. of Auburn Hills accounts for about 40 percent to 50 percent of the side airbag market in North America, Pekar said, and the company’s goal is to maintain that position as the new regulations go into effect.
TRW, meanwhile, aims to boost its market share.
Doug Campbell, vice president of occupant safety systems engineering for TRW, said the company believes that it has an airbag designed to prevent injuries that occur in rollover accidents that can easily be paired with the side-curtain airbag, and NHTSA might adopt additional rollover crash test requirements next year.
One of TRW’s strategies is to market the rollover product along with airbags that meet the current regulations.
“It’s a very small step now to put in the rollover protection,” Campbell said.