[pratika]

Whereas the USD->INR price argument makes sense, I also think that even if USD->INR changes were not as dramatic, the big 3 would have still hiked their prices and introduced poor man's luxury options (A3, 1-series, A-class, etc.) at the bottom. Anyone who buys the entry luxury options is paying a very high premium for the badge value.

These car manufacturers are considered to be luxury brands. As opposed to a consumer brand, luxury brand value has a positive correlation with its price. I remember a luxury watch company once said "That our watch shows time is incidental." Thankfully, the car companies dont claim "That our cars drive is incidental."

Mercedes Benz has been seen as a luxury brand since decades in India. If, in the past, MB management went behind volumes instead of preserving their brand, I am not sure how many people would consider buying their cars over BMW/Audi. So the only choice MB had was ask for a significant premium for their brand. And I think they succeeded.

We all know that Maruti/Toyota/Hyundai make cars that are much more reliable than the Germans. Still, given their branch value, Maruti/Toyota/Hyundai would find is extremely difficult to sell a car that competes with the big 3. Maybe that is why Toyota sells premium cars under a different brand - Lexus, Honda - Acura, Nissan - Infiniti.

[alpha1]

Originally Posted by ACM

Yes Toyota has just been Greedy with the Innova and the Fortuner. That is not in doubt.

No one can afford to be greedy in a competitive market.
If Toyota is able to raise prices, more and more customers are ALSO willing buy at higher prices. THUS the prevailing price.

I don't understand when people will get over the communist days of calculating costs and placing a markup to arrive at regulated price.

Doesn't happen that ways.
Price depends on seller's appetite of selling vs holding inventory. If customers don't like the prices, seller will be forced to cut prices.
If customers lap up the products with high prices (Apple is a great example), the seller has an option to raise prices further and keep same volume or keep the same price and increase volume.

In case the cost works out to be greater than the desired price, you go back to meeting rooms and discuss ways to reduce the flab.

[avira_tk]

Mercedes was taking a bad hit in terms of volumes when they were undercut by the 520d and the A6 for a while, suddenly the price wars stopped. One of the reasons given was that the other two were evading duty while importing complete engines while Mercedes had invested heavily to localize theirs. I guess once the fines were paid and new duties calculated, the cars weren't all that affordable.

[vivriti]

Prices have risen but reliability has fallen compared to the 90's. If status is not an issue, a Volvo feels like a much bigger VFM. As said here, the Skoda Superb also sells well because not only it is a VFM but also a lesser risk compared with the bigger Germans for those who bother less about status. Personally, I would rather go for a Superb rather than risk it for a BMW/Merc/Audi.

[Contrapunto]

Originally Posted by vivriti

Prices have risen but reliability has fallen compared to the 90's.

Probably OT but I will not agree to that. The actual numbers of users who can afford luxury have risen exponentially, and though the number of complaints are higher, its on a much, much higher base. However much I cry "sour grapes" over rising prices, and grumble about C class jumping up to E class levels just when I thought I could possibly afford it, I don't think quality levels have fallen at all.

[jfxavier]

I hope other manufacturers can take advantage and price their cars sensibly and take away some of the sales volumes.
Come on Volvo..
Heard that the T6 is making a comeback.
Hope it comes with the 8 speed tranny.

[Sahil]

Originally Posted by vivriti

Prices have risen but reliability has fallen compared to the 90's. If status is not an issue, a Volvo feels like a much bigger VFM. As said here, the Skoda Superb also sells well because not only it is a VFM but also a lesser risk compared with the bigger Germans for those who bother less about status. Personally, I would rather go for a Superb rather than risk it for a BMW/Merc/Audi.

No offense but this is the most hilarious misconception I have read here in a while
Going by my own example, we bought our first Mercedes in 2001 it was by far the most unreliable car. So much so that for the past 14 years I haven't touched the brand again for same reasons. However today the reliability levels are far far better.
Currently I own a Skoda Superb along with other Germans. The Superb is by far the most unreliable and gives me nightmares of what merc did in 2001. Going for the superb IS the biggest risk!

[vivriti]

Originally Posted by Sahil

No offense but this is the most hilarious misconception I have read here in a while
Going by my own example, we bought our first Mercedes in 2001 it was by far the most unreliable car. So much so that for the past 14 years I haven't touched the brand again for same reasons. However today the reliability levels are far far better.
Currently I own a Skoda Superb along with other Germans. The Superb is by far the most unreliable and gives me nightmares of what merc did in 2001. Going for the superb IS the biggest risk!

Looks like I've read old reports and not the recent ones and kept myself updated. It is good to hear that Merc reliability had increased. BTW, when was the increase in reliability as far as Mercs are concerned ?.

[Gansan]

Luxury brands, be it cars or any other product, sell on exclusivity and aspirational value. More the price, the more these two points go up. They don't want to be mass market players, I think.

[ACM]

Originally Posted by vivriti

Looks like I've read old reports and not the recent ones and kept myself updated. It is good to hear that Merc reliability had increased. BTW, when was the increase in reliability as far as Mercs are concerned ?.

Mercedes were most unreliable from about 2000 to 2008 and have been improving since yet their SUV range of GL and ML made is the USA are still lower on reliability compared to the c, e & s

[autobahnjpr]

Pricing of any product is a very tricky affair. It entirely depends on the motive of the seller. If you want to project an image of exclusiveness and the general purchasing power has increased among the buyers, you tend to increase the price to a level where the brand or product retains the mark of exclusiveness irrespective of the changes in other variables like exchange rate, interest rate, inflation and so on. Not only BMW, Audi or Mercedes but brands like Porsche have hiked their prices almost twice.
The Cayenne diesel which used to cost about 65 lacs about 2-3 years back has now been pushed beyond 1Cr. Bentley, Rolls Royce, Lamborghini have all jacked up the prices of their cars.
I think what Audi, BMW and Mercedes are doing is increasing the tag value and then offering discount, something which the apparel companies do so well. This could also have been due to some research findings done by these companies which indicates that customers purchase psychology is changing. If everyone has a BMW then what is the fun in owning a one?

But just like real estate market, i think it is time for price correction in luxury car market.

[mayjay]

Fantastic thread. Kudos to the thread starter!

For all the people speaking up for these German brands, let's all admit that these brands follow a cream skimming policy in the Indian market and leave it at that. The C- class CBU / CKD example is the most obvious example of that - check out the import price of that unit to get a better sense.

The value of the Euro has crashed to 65 from 85+. While these brands were quick to increase prices when the rupee tanked, don't expect any price reductions from these brands. There is a distinct lack of honesty which seems to be at play here.

While we are on the topic, it's not as if these brands are ultra luxurious which can merit these premiums. In the developed markets, they carry at best a 20-30% premium over the more mass market offerings. Only in developing markets like India they can get away by such high pricing. This in part due to lack of real options and also the Indian mindset, which frankly is exploited to the hilt by these brands. Our rich class love to show off their wealth and in some ways, the more expensive these cars are, the better.

Surprisingly there is no move to grow the market. Volumes which are the drivers of any market are being seen as an anathema by these brands. There is usually a reference to profit led growth in the statements by the top management, as if that helps the customers in some way. BMW has been particularly guilty of such condescension, pitching the ~3 cr i8 as a focus area for Indian customers. Really?

It will be a long time before these brands become serious about the Indian market.

[Foxbat]

Originally Posted by ACM

In 1995 when the E Class Merc was launched at about 25L Ex-showroom the USD was 35 vs Rs. Today it is at 47.5L Ex-showroom with the USD at 62 - Feels like the price trend is fine.

Although your argument does make sense, as pointed out by many other members, consider this also:

Since the Euro is used in Germany,

In 2000 (Launch of the Euro) 1 EUR = INR 39-42

Now 1 EUR = INR 66-68

[zombiedriver]

I'm on the wall on this topic. Yes it's absolutely ridiculous not to decrease prices when the Euro/Dollar go down while they don't hesitate for a second to increase it when it goes up, But then none of the Indian companies are saints here too. They would probably do something similar given a choice. I'm not for what these luxury brands do but at the same time i wouldn't single them out.

And then there is this ridiculous tax structure that our government has. I agree that these brands probably have a 30% mark up to the other brands say for example in the US. A small example would be a comparison between the 2015 VW Passat and the BMW 328D/328i ( essentially the same 3 series but more feature packed ). The top spec Passat costs about $31000 and the BMW's around $39000 ( 30% mark up approximately ) which translate to about 20 lakh rupees and 25 lakh rupees approximately but the 320D retails for over 50 lakh ( Bangalore OTR ) and the Passat if and when launched is going to be pushing the 40 lakh mark. The way i see it, Its the import tax of 100/110% ( not sure about exact number ) that is one of the culprits.

[Turbanator]

One aspect probably being overlooked is the low number of sales these manufacturers do vs the costs associated in maintaining sales & service standards that customers in this segment expects

When these guys set up their marketing / manufacturing infrastructure many years back , they must have got some initial funding from parent companies due to which they could afford to sell at lower mark-up's but after 5-6 years I doubt they will be getting any support . When Euro / USD was increasing everyone upped the prices as they were already under pressure on rising overheads and got a possible reason to explain to customer .

Many European companies shifted to USD accounting in India during boom of Euro in 2013 or even if they are are still in Euros, they must have hedged a major portion of budgeted volumes before start of Year and they might have limited options .

In my opinion these high prices are here to stay until volumes for these cars built up ..