[hybridpetrol]

Nowadays, many features that were previously part of a luxury car are available even in C or D segment cars. Luxury cars are luxury, because of their exclusivity and the sheer premiumness they offer, right? Not just because they have a particular logo, but also because they have incomparable super rich features.
If a D segment car offers the same, then isn't it necessary for a luxury car to upgrade above the ordinary and provide more that are still out of reach for the ordinary, so that those who are economically successful in their life can aspire for these and treat themselves with luxury benefits of their victory.
A VW Jetta costs roughly 25L, and a Toyota Camry costs roughly 35L (while the hybrid about 40L). If a luxury sedan offers similar features and costs similar or a little more, will that still be a lovable among aspiring buyers?
So, these luxury brands are pouring in their resources into developing most advanced technologies providing extra luxury features at prices that are jacked up. I think that is justified comparing the prices of how the whole market has moved up.
After all, a buyer of luxury car does not consider it a VFM, and he does not want the whole world to agree with him about the pricing. He buys it because he is capable of rewarding himself with super rich cars with latest technology that he can boast.
I do not think the price increases are a conspiracy in any way. Due to competition, they are forced to provide similar features across their competing cars, and hence the prices are increased across the board. By the way, does anyone consider it a conspiracy when all the B2 segment cars were priced around the Swift, which was probably the first successful B2 segment car?

[zombiedriver]

I am one of the many people who has had the privilege of stepping into the "luxury" segment recently.I say stepping in as I have one of the smallest and cheapest cars of the entire segment.
My personal reason for buying my car was definitely not to boast about it.I understand there are people who know nothing about cars and yet pay big bucks for them just to satisfy their ego or boast about them but then I have also come across people who have upgraded from a two wheeler to an Alto 800 and boast about their cars equally.So sense of pride is there across every segment and not just the luxury segment.
I for one bought my car just because it was the best car to drive in that particular budget, If a 10 lakh rupee car offered the same satisfaction I would not have spent 4 times that money for mine . Infact if I were to compare it to the 3-er it loses out on many features but the heart is the same i.e the engine.Also it definitely does not have a few features that the Elite i20 which is almost a quarter of its price has.My way of justifying it is please look at how a 10 year old Hyundai (No bias,only as an example) ages and a 10 year old luxury car ages.That's where build quality comes into picture. A car is not just about what bling it has IMHO.

[dark.knight]

The thread title explains it all - luxury cars. Now luxury is an overused term in marketing today, almost any producer of any product uses the term luxury to soften the pricing blow & also to create a halo of sophistication. In its purest sense though, luxury stands for a cut above the average.. be it in brand recognition, usage of better materials, better performance or price. Luxury in the real world is relative in the sense that one man's expectation from it may be more or less than another man and this is where the confusion begins.

Ultimately value is relative, in our country today there are watch boutiques selling analogue luxury watches from a range of 2 lakh-50+ lakhs. Also there are clothing labels that are made in Bangladesh/China that charge over 10 times the cost because its a luxury brand. In that way we can surely assume that the big Germans are charging a premium for their brand recognition and that's quite understandable since their costs too go up for marketing and research. I'd say as of now the only massively overpriced cars in India are those that are fully imported like Porsche, RR etc because of huge import duties, the rest cost what they have to.

I'm not supporting paying a premium, like the majority I've always believed in value but the luxury market is in another league altogether. They invest heavily in research & development, quality, marketing and customer satisfaction, their aim is to please the big spenders and make products worth their while. Also I've seen an exponential rise in regular car-maker prices over the past 2-3 years be it a 10 lakh rupee hatchback or a 30+ lakh SUV like Fortuner. Luxury surely must cost more than that?

[avira_tk]

Originally Posted by thatsdileep

Although you are entitled to your views and opinions but generalization of government officials being clueless about the businesses is not required in this discussion where I've mentioned about my uncle to quote one of my sources and background of my views. Yes my uncle is not a part of the business and for that matter none (or most) of us in this thread are part of this business. Your affirmative statements about his opinions "not related to market" and "zero sum arguments" is totally uncalled for, as you don't have any first hand information about his credentials or interests in this industry. I don't want to go further into this discussion and explain my uncle's enthusiasm in cars and so on. Your first paragraph could've been straight to the point without derogarating a particular individual or a class of people (govt officials). So let's try to keep the discussion straight to the topic without targeting specific individuals.

Hope you understand. Don't take me wrong!
Mods: Feel free to delete the post if anything I said above is inappropriate!

You brought your uncle into this, according to you he said prices should go down, I didn't see any qualifier there, correct me if I got it wrong. Having an opinion about a class of people is part of life, I've find plenty of it here too, getting hot under the collar won't help. Zero sum argument in question- lower duties equals lower prices, not really an expensive low volume assembly doesn't mean lower costs, that is what I referred to, according to your earlier post, prices must come down. I think I explained clearly why that wouldn't happen. I don't think any government official in this country is qualified to comment on the pricing(this alone) of luxury cars, they can investigate taxes and stuff, you think differently, I guess it takes all kinds.

[thatsdileep]

Originally Posted by avira_tk

I don't think any government official in this country is qualified to comment on the pricing(this alone) of luxury cars, they can investigate taxes and stuff, you think differently, I guess it takes all kinds.

Yet again this seems to be too strong an opinion demeaning certain set of people. It is one thing to say "most" which might be acceptable but affirmatively saying "all/any" is pure generalization without having stats or data to back it up.

Your explanation/opinion regarding the pricing strategy is well taken and I do agree to some extent.

I think we are just going off the topic and there is no point dragging this further. All good mate lets move on.

Cheers

[noopster]

Originally Posted by thatsdileep

I think we are just going off the topic and there is no point dragging this further. All good mate lets move on.

Mod Note: Agreed. Please stay on-topic and avoid personal comments. Some posts have been deleted.

[sourav9385]

I don't get the point of this thread.

Yes, prices of cars made by the German trio have increased over the past few years. But so has the average annual income! So has the cost of manufacturing! So has the cost of everything!

Did you honestly think that you could keep getting annual appraisals, year after year, and the prices of cars and everything around you would go up only a little? Did you honestly think that your business would keep on increasing, year on year, but the set of flats being constructed opposite your house would cost only a little more than it did 10 years ago?

Let's be practical here. India is a developing economy. Prices of everything are going up. 8 years ago, a Fiat Palio used to cost 4.7 lakhs. Today, a fast, practical, good looking hatch costs more than twice that! And, I'm not even bringing the Polo GT TSI into the mix!

So, why is it so surprising that prices have gone up? Aren't you, who is reading this post, earning more than twice you were 10 years ago? I know I'm earning not twice, not thrice, but nearly 6 times as much as I was 9 years ago, since I started working!

So, the German trio are expensive. Yes. But they are in tune with the purchasing power of the segment they cater to! Not just that, the segment they are catering to is expanding at an alarming rate. Don't believe me? Ask yourself why Mercedes has introduced so many variants across their range! Ask why Audi has bothered to bring in the A3, Q3 etc. It's simple. The purchasing power of people in India is going up, at a tremendous rate. And everyone, German trio included, is in the business of making money.

So they will hike up their prices, as long as there are people ready to buy the stuff they want, prices be damned!

[Jeeper1941]

Interestingly, Mercedes seem to have lowered the price of the new facelifted, more powerful A45 AMG by $1019 (in this country at least, don't know about India). The first photo is of the old contract that I had signed (for the 2015 model), the second one is the new contract (for the 2016 model).

[GKR9900]

Apologies for the long gap in replying as I got caught up with work.

Originally Posted by Jeroen

Would it be more/better value for money if they were selling the car at a loss?

Originally Posted by Jeroen

I asked before, would people be more inclined to buy, say a Mercedes, at its current price level if Mercedes was making a loss at each car?

Of course not! In fact, my buying criteria is not based on how much profit/loss the manufacturer makes, but how much that product appeals to my perception of value and my priorities. For example, it's extremely hard for me to come to terms with the pricing of A3,CLA,GLA etc mostly because their performance is not that stellar. The same goes with choosing a 520d over a 320d. Cars which are way too similar in their underpinnings being priced over a million rupees apart with no significant changes rather than design and space!

On the contrary, there has been some exceptional offers from the Germans as well. Some years back, Audi had an S4 available in India. It was really well-priced. Heck! Even the 530d justifies it's price tag of around 80L with the performance and equipment on offer, so does the CLA45 AMG. Even the W222 S Class seems reasonably priced for THAT segment IMO. But they have totally gone crazy with their pricing at the bottom end of the market.

If I were to choose between an A3 40 TFSI and an Octavia 1.8 TSI , I would always go with the Octy, even if I didn't have any budget constraints. Also the prospects of tuning the car later is a priority. Considering that the Skoda on-road comes to about 24L and the A3/CLA at around 40L,, it's hard for me to convince myself to pay almost 1.7 times that price just for a bit more quality and brand value. May be at 30L for the top end A3, I might have some confusion, but the current pricing strategy just doesn't cut it for me. In that sense, I may not be a prospective customer for that segment then.

Originally Posted by prakhar1998

Could you please clarify as to how companies are taking advantage of customers?

Continuing from where I left off above, I understand that there are customers whose buying criteria is entirely different from mine. There are customers who are more interested in brand image and the sense of accomplishment that comes along with owning an A3/CLA/GLA. They might be least bothered about power/torque figures or outright performance. It's just how their priorities are. These too add to the volumes. When there are enough takers, the company doesn't have anything to worry. They don't even have to revise their strategies. Why fix something that isn't broken, right? If the said products satisfied my priorities, I would've gladly bought one. Unfortunately they don't and the wait still continues.

Originally Posted by prakhar1998

Now coming to your price part. India has a 30% duty when it comes to CKD automobiles as opposed to a 2.5% duty companies like BMW have to pay to import their vehicles into USA. The 3 series isn't manufactured in USA.

If so, BMW has started manufacturing the 3 in India now. And still, a made in India 3'er is expensive than a CKD US 3'er. From the discussions so far, what I have understood is that local manufacturing has been set here as a means to increase profit margins, and not to reduce the prices. While there's nothing apparently wrong with that, my love for these German brands would've grown several folds, had they spruced their models up with better performance and equipment, rather than just continue with bare basic ones.

Originally Posted by V.Narayan

How can any pricing be fishy in a competitive free market where the producer/trader is free to sell at whatever price suits him and the buyer is free to buy or refuse to buy at that price.

Please don't be under this mythical illusion of India being a low cost of production country. The business I own and run operates industrial services in 9 countries including 4 in the west and trust me after Dubai, India comes next in cost of infrastructure, electricity, water, land, licenses, fending off the inspector raj, etc All this thanks to the vested interests of our political class and sheer incompetence & shabby attitude of our bureaucracy. The only thing cheaper in India is the lower and middle spectrum of manpower - that's all. This is not some journalistic view this is what I see in my ledger each month.

Thank you for throwing some meaningful insights into the discussion. If what you say is true, shouldn't the same be applicable to other manufacturers? I'm especially talking about the motorcycle manufacturers(KTM & HD) quickly expanding their foot hold in this country by pricing made in India products at par or below their global counterparts. Especially considering the fact that they're out right niche segments? (I believe Indians are yet to wake up to the idea of a 4 Lac rupee motocycle)
If anything, the A3/CLA should have been to the car market what the Street 750 had been to the motorcycle market.

[rahul_jo]

It's simple and basic marketing 101. Nothing is expensive as long as the customer is willing to pay the price.

In other words, customers are still happily paying the price for such so called luxury. Now in terms of pure logic, does it make financial sense or can we say that these cars are overpriced? Logically, yes.

But, we buy with emotion and later on try to justify it with logic. There is no perfect answer to this. The only answer is this - The demographic these brands target happens to be upper middle class or richer folks.

Folks who don't really think too much about what they're paying.

[pgsagar]

Originally Posted by rahul_jo

But, we buy with emotion and later on try to justify it with logic. There is no perfect answer to this. The only answer is this - The demographic these brands target happens to be upper middle class or richer folks.

Folks who don't really think too much about what they're paying.

Not always true. Many a real rich guys in my town drive around in humble Swifts and Citys. And some wannabe rich or some who want to be perceived as rich even though they are not, go to great lengths to own such cars. I see some 1 year old such cars being repossessed as the pseudo-rich could not even afford to pay the EMI.

[Aroy]

Originally Posted by pgsagar

Not always true. Many a real rich guys in my town drive around in humble Swifts and Citys. And some wannabe rich or some who want to be perceived as rich even though they are not, go to great lengths to own such cars. I see some 1 year old such cars being repossessed as the pseudo-rich could not even afford to pay the EMI.

Which is what the manufacturers want - the more expensive the car, the more will the"wanna be" buy them. What they are getting is not the car as much as the explicit price tag visible to all. All who matter to them, can see that they can afford an expensive car.

[rahul_jo]

Haha! Well, can't disagree with this one.

We do have some people who buy the things they don't need with the money they don't have, to impress the people they don't know.

Originally Posted by pgsagar

Not always true. Many a real rich guys in my town drive around in humble Swifts and Citys. And some wannabe rich or some who want to be perceived as rich even though they are not, go to great lengths to own such cars. I see some 1 year old such cars being repossessed as the pseudo-rich could not even afford to pay the EMI.

[M00M]

BMW announces price hike from January to make sure people buy all their existing stock and they start the year afresh with more profits.

http://timesofindia.indiatimes.com/b...w/49935302.cms

Considering the fact that the are at the bottom currently even though their cars are the best to drive, don't think this strategy is what should be followed.

I feel the current man in charge is not as dynamic as his predecessor and hence the constant price hikes and sales going down hill.

Ive read some comments about how we should not expect manufacturers to maintain their prices. I beg to differ. I understand rupee has tanked but in the past lets take the example of Dollar. Dollar tanked but all car manufacturers maintained their price in the USA.

Honda for example used to sell CRV around 25-35 k USD. It still does the same. However in India every time a new car comes from any manufacturer the price goes up.

I agree the new 7, S, and A8 are too advanced and justify a higher price to a certain extent but the bottom end is just becoming too expensive. A underpowered A180 CDI for 37 lacs is just ridiculous and a 320 d costing 37 lacs about a year ago and a half ago now costs 50 lacs without discount is just ridiculous considering they haven't added any new features.

Just my view.

[Turbanator]

I feel the current man in charge is not as dynamic as his predecessor and hence the constant price hikes and sales going down hill.

Very True - they sit on Inventories and then make flash sales as done recently on 7 & 3 series . Given the Euro / Rupee exchange rates they should have instead reduced prices - it should not be long before this guy is moved , I don't think they will meet or come close to any Targets on both sales and profitability .