[stanjohn123]

Did you guy's notice the price bump in the new G30 520d. It was launched in 2017 at 49.9 Lakhs Ex-showroom. In 2019 they bumped it again by 10 Lakh's to 59.9 Lakhs Ex-showroom. If you are planning on buying the new 5 series, just note that you deserve the instant 10 Lakh Rs discount on these car's or you're going to take a very bad depreciation hit.

[SS80]

Hi All,

I have been reading reviews on teambhp for over 5yrs now and I still don't understand as to what could be the rational justification for such a high price of certain premium cars.

What made me post this thread is the recent thread about Mercedes Benz 350D SUV that costs over 1.50crore.


Pic courtesy: Mercedes Benz Official Site

I understand CBU cars cost way more than the CKD/ Locally made cars mainly due to taxes. But still, 1.50Crore sounds like a super exaggerated price for 4 wheels that looks so simple and similar to the Old Gurkha Design

1. Is it the cost of R&D done by Mercedes Benz that's passed to the already limited number of buyers they have?
2. I am sure not everything would be new from scratch, they would definitely be using something from their existing parts bin, which would mean reduced making costs.
3. Also many technologies seen in these cars were already present in previous versions of the same car - like Hill Descent Control, Differential lock, some of the switch gear, ABS, EBD, Airbags, basic stuff like wiper motors, alternator, power window mechanism, brake calipers etc
4. It's the super rich who buy these kind of cars, but then as a person gets richer & richer, he tends to value money more than ever before. What mindset would they actually carry to buy something like this?
5. Also note that not all Mercedes Benz customers are auto enthusiasts, many don't even know how to drive, sometimes it's a lucky chauffeur who gets to enjoy the beast.
6. Lastly think about the depreciation that happens in the very first year.

Are people paying a big premium for purely status + exclusivity and not for the hardware Underwood? As in if a premium brand launches something that's not so different from its previous model/ not that much of a leap when compared to the competitors, it would still sell for the logo?

I am sure a properly modified Thar would be able to do atleast 50% of the stuff the 350D did (I am referring to that ACI video on youtube).


Other points to consider:
1. Quote from Mercedes Benz official website: 15,538 units sold between January-December, 2018 (+1.4%; Jan-Dec 2017: 15,330 units)
2. As someone rightly pointed out, it does still look like a Gurkha with mods (atleast to the common man's eyes).
3. I have nothing against Mercedes Benz/ any specific manufacturer. But it definitely looks like, some of the premium cars are overpriced.
4. Some cars might be worth the money as they are extremely limited for example Quote from thedrive.com Production of the Chiron is currently limited to just 500 units, 300 of which have already been sold. Unlike this the Mercedes Benz sells in much higher volumes (read 15000 units of MB cars in 2018 in India alone)

PS: A quick google search shows the below as the top 10 costliest cars sold in India.

Bugatti Veyron: INR 12 Crore
Maybach 62 S: INR 5.10 Crore
Maybach 57 S: INR 4.85 Crore
Rolls-Royce Drophead: INR 4.20 Crore
Rolls-Royce Phantom Coupe: INR 4 Crore
Bentley Brookland: INR 3.80 Crore
Lamborghini Aventador: INR 3.69 Crore
Ferrari 599 GTB Fiorano: INR 3.57 Crore

[AnandB]

Thinking like us common men. Disagree with your point 4. To super rich even a Veyron for 12 crore is nothing. Very few are enthusiast and care for specs or comparison. They would rather have many or most unique of cars to match their status.

[greenhorn]

I don't either. I drive a Civic Si here in the US, and and get free rental premium sedans because of multiple reasons. Most recent was a BMW X3 and an Infinity Q50 both of which would fall in the 50-60L range. I found nothing to write home about. Both their performance and handling significantly worse than my civic (the RWD infinity actually got stuck in the snow where my civic usually never does). The only thing i found useful that I was missing in the civic was the auto climate control.The team bhp review says the Civic's 17L price does not justify the 50% premium over a city. And I found neither of these cars to be any better (and in some areas worse) than a civic that costs a third of them!

[shankar.balan]

QUOTE:Are people paying a big premium for purely status + exclusivity and not for the hardware Underwood? As in if a premium brand launches something that's not so different from its previous model/ not that much of a leap when compared to the competitors, it would still sell for the logo?QUOTE:

Just look at the car market over the last 15 years.
Innova top spec came in at approx 10 lacs.
Today the top spec sells for 30 lacs.

Maruti Swift Top Spec Zxi could be had for 6.5 lacs
Now it is 11.25 lacs

Skoda Superb used to be a 22 Lac car
Now it is closer to 36 -37 lacs

Merc C Class a while back could be had for 24 lacs brand new
Now it is 50 lacs

The list goes on.

And in a direct answer to your question what does one get for the money?
Lots more gizmos, electronic nannies, and auto everything.

And a certain indefinable status of course! Why ever do you think people buy these big marques!

In the 1980’s if one saw someone driving about in a Jaguar, or a Mercedes, one new the car was imported and that the owner was indeed someone “BIG”.

Now, every Tom Dick and Harry or if you prefer, Michael, Mohamad and MadanRaj are driving about in some serious cars! So basically Luxury, has become easily accessible and has definitely become commoditised!

Hell, if I take my own example - I am just an average Joe like anyone else out there - but I have been also somehow, been able to achieve what I would NEVER have even DREAMT OF, 10 years ago, in terms of the kind of car, I am able to now actually buy and own (second-hand of course!)

The market therefore is maturing because there is more and more supply and hence, it is possible for more and more people to get stuck in, to what would otherwise be an unattainable luxury marque!

Truly, this is commoditisation at its best.

Another case in point, BMW according to rumour, plans to offer 3 cylinder engines in all its entry level models, thereby making them more accessible in a price sensitive yet aspiration adl market like ours.

Saying that, from the status quotient point of view, the car marques will most definitely price their wares this side of larceny, because the driving force of status is a bit like the “Male Peacock’s Plumage” - the urge to “SHOW”....a very powerful motivation indeed!

[Aditya_Bhp]

Originally Posted by shankar.balan

Maruti Swift Top Spec Zxi could be had for 6.5 lacs
Now it is 11.25 lacs

For a second, I was shocked, then on checking the prices, found the Swift ZXI+ has an on road price of 8.6 lakhs with a discount of Rs.40000, hence net 8.2L, thats still great pricing that Maruti has maintained over the years, an increase of just around 1.5Lakhs but with added features

[suneel]

Originally Posted by SS80

Are people paying a big premium for purely status + exclusivity and not for the hardware Underwood? As in if a premium brand launches something that's not so different from its previous model/not that much of a leap when compared to the competitors, it would still sell for the logo?

I am sure a properly modified Thar would be able to do atleast 50% of the stuff the 350D did (I am referring to that ACI video on Youtube).

As someone rightly pointed out, it does still look like a Gurkha with mods (atleast to the common man's eyes).

It appears that you are viewing these vehicle purchases as a one variable decision. To respond to these points of yours:

1. I don't think the reason people buy these cars can be boiled down to JUST "status/exclusivity". That may be a part of the reason but there are plenty of other reasons I can think of for the G Wagon alone - quality, aesthetics, durability, reliability, comfort + performance on road (compared to other equally capable 4x4s) etc.

2. Yes the new G Wagon is not radically different from the last one. If it was then it's customer base would be very upset and uninterested in the product. Mercedes makes major changes to all their other vehicles with each new generation. The entire point of the G Wagon is that it is a classically styled, true to its roots 4x4. If they made big changes to it on those fronts it would be any other SUV. There also aren't many choices in this niche segment. This is a niche product and it is successful in its segment.

3. A modified thar would probably do 50% or maybe more than the G Wagon can do offroad. That's about it. Can a modified thar do 50% of what it can do onroad? Definitely not. Can it be 50% as luxurious or comfortable on the inside? Can it comfortably seat as many people, hold as much luggage, last as long without breaking down? Be as enjoyable on road trips/long drives. Will it ever have the same fit and finish, electronic features etc?

People do not buy a G Wagon for pure offroad capabilities alone. Again, this is a multivariable product. I don't think anything in the market is offering an experience that is the full package that the G Wagon offers (besides the Wrangler give or take IMO)

Also I disagree that it looks like a Gurka with mods. Only someone with minimal interest in vehicles would fail to see the differences. The general body style might be similar but there are gaping chasms of difference when you see these two vehicles in dimensions like paint quality, fit and finish, wheels and tires, size, proportions etc.

[shankar.balan]

Originally Posted by Aditya_Bhp

For a second, I was shocked, then on checking the prices, found the Swift ZXI+ has an on road price of 8.6 lakhs with a discount of Rs.40000, hence net 8.2L, thats still great pricing that Maruti has maintained over the years, an increase of just around 1.5Lakhs but with added features

Ok here was my point of reference.

[Aditya_Bhp]

Originally Posted by shankar.balan

Ok here was my point of reference.

But how can you compare a ZDI+ AMT with a ZXI?
Also, the ZDI+ AMT costs around 10.1L Rest Of India.

For proper comparison, a BS6 Swift ZXI today costs 7.7Lakhs. And now, you get discounts also of Rs.40000 to Rs.60000. So net price is Rs.7.3Lakhs, which is just an increase of Rs.80000/- with more features and BS6 emission standards.

[shankar.balan]

Originally Posted by Aditya_Bhp

But how can you compare a ZDI+ AMT with a ZXI?
Also, the ZDI+ AMT costs around 10.1L Rest Of India.

For proper comparison, a BS6 Swift ZXI today costs 7.7Lakhs. And now, you get discounts also of Rs.40000 to Rs.60000. So net price is Rs.7.3Lakhs, which is just an increase of Rs.80000/- with more features and BS6 emission standards.

Ok - a little poetic license!
Basically the increase in prices overall is absolutely ridiculous

[Sankar]

Originally Posted by SS80

1. Is it the cost of R&D done by Mercedes Benz that's passed to the already limited number of buyers they have?
2. I am sure not everything would be new from scratch, they would definitely be using something from their existing parts bin, which would mean reduced making costs.
3. Also many technologies seen in these cars were already present in previous versions of the same car - like Hill Descent Control, Differential lock, some of the switch gear, ABS, EBD, Airbags, basic stuff like wiper motors, alternator, power window mechanism, brake calipers etc
4. It's the super rich who buy these kind of cars, but then as a person gets richer & richer, he tends to value money more than ever before. What mindset would they actually carry to buy something like this?
5. Also note that not all Mercedes Benz customers are auto enthusiasts, many don't even know how to drive, sometimes it's a lucky chauffeur who gets to enjoy the beast.
6. Lastly think about the depreciation that happens in the very first year.

Are people paying a big premium for purely status + exclusivity and not for the hardware Underwood?

I am of the belief that the real value of any car is decided by the used car market and across all segments. Some cars even appreciate in used car market.

Premium car prices do not realistically reflect what has gone into the product; often the markup for the "brand" costs more than what has gone into it.

[sreerknair]

Originally Posted by SS80

Hi All,

I have been reading reviews on teambhp for over 5yrs now and I still don't understand as to what could be the rational justification for such a high price of certain premium cars.

Well, you get the justification if you are a billionaire or multi millionaire. Google for Veblen goods. In simple terms these are goods whose demand in its target segment increase as its price increase. This is contrary to the normal demand curve. The target audience for such products is people who value exclusivity, luxury, and status. Check the price of some Louis Vuitton bags. You will then think that the Merc Wagon is cheaper

[stanjohn123]

Originally Posted by sreerknair

Well, you get the justification if you are a billionaire or multi millionaire. Google for Veblen goods. In simple terms these are goods whose demand in its target segment increase as its price increase. This is contrary to the normal demand curve. The target audience for such products is people who value exclusivity, luxury, and status. Check the price of some Louis Vuitton bags. You will then think that the Merc Wagon is cheaper

This is actually a very good explanation. As more and more Indian's become richer, they want to remain exclusive. They also want that status desperately to the point where money has lost it's value.

But to the rest who still have the Indianness intact in them, there is always a great deal to be had from Luxury Manufacturer's. Don't be ashamed of negotiating with them and checking out car prices in different cities. You will be shocked in finding the difference.

[GTO]

Senior guy at a luxury car company tells me that the entry-level Germans are intentionally overpriced (e.g. GLA-Class for 40 lakhs OTR). Reason = not just profits, but they don't want a situation where every Tom, Dick & Harry has a small new Audi / BMW / Mercedes. They don't want the entry-level cars to become so cheap & common that it affects the brand cachet of the more expensive models.

As an example, see what happened to Coach handbags which eventually became a $150 - 200 item, selling mainly on discounts in outlet malls.

German HQ can & will limit the number of kits you get for the cheaper models.

[mayjay]

Yes, it’s quite sad. These players don’t take the Indian market seriously. They are always quick to increase prices here to maintain the exclusivity.
Getting dealers to setup up huge showrooms in a high real estate cost market also just adds to the cost structure, which is then recovered from the end customer.

Sales for these brands could be much higher, to the extent of at least 2-3 times, if they priced their products right and did not follow a cream skimming strategy. As an example, just look at what happened when Apple India got its pricing right with the XR / 11.

The executives at these brands would also be taken more seriously in their headquarters if they could understand this and look to grow the market. That would however require going against the usual grain of thought and will take a strong and innovative person to do that.