[itwasntme]

Silly money IMHO.

Let us consider the prices of the non-discounted OTR prices of Skoda in Bangalore:
Octavia (DSG Elegance): Rs. 26.4 lakhs
Yeti (4x4 Elegance): Rs. 27.8 lakhs
Superb: (DSG Elegance): Rs. 33.3 lakhs!

As context, I bought my Cruze LT for 14.8 lakhs in July 2011. Even after factoring in the Skoda brand, the DSG (with its own pros and cons!) and what-not, can I honestly perceive these vehicles as worth my hard-earned money?

Am at a complete loss as to what to buy as an upgrade which will appeal to me for the next 5 years. But 33 lakhs? That is what I took as a 85% home loan in 2003 :-(

[GKR9900]

Originally Posted by srgntpepper

Both BMW and MB claim 50% localization, and then reduce the prices by a lac or two. Most of these cars are offered with some discounts anyway, so it is possible that the OTR price may not change at all.

So what they have essentially done is to reduce the prices at the manufacturer level and withdraw the dealer discounts?! Aah! So the 'Make in India' tagline was not for the products, but the policies. Way to go!

Originally Posted by Accent Martin

Luxury products do not get impacted by inflation or purchasing power. Luxury products (be it any segment / industry) don't come in line of the regular demand / price equation that we have studied.

No matter how hard I try to etch that equation into my head, I always fail miserably. It's not just the economic equation that baffles me, but I can't seem to climb up that mental barrier. I mean, why would anyone want to buy a Q3 instead of a Fortuner? (Overpriced-yes, but at least you get more space,go anywhere capability, low maintenance costs, bullet proof reliability and good resale value) May be the pull of the four rings is too alluring. I guess as petrol-heads we must be able to understand that classic 'Heart vs Head' tug of war!

Originally Posted by Accent Martin

Its the opposite and the manufacturers of luxury cars need to keep alive the aspirational value that their products hold.

Like this, you mean?

[Accent Martin]

Originally Posted by GKR9900

No matter how hard I try to etch that equation into my head, I always fail miserably. It's not just the economic equation that baffles me, but I can't seem to climb up that mental barrier. I mean, why would anyone want to buy a Q3 instead of a Fortuner? (Overpriced-yes, but at least you get more space,go anywhere capability, low maintenance costs, bullet proof reliability and good resale value) May be the pull of the four rings is too alluring. I guess as petrol-heads we must be able to understand that classic 'Heart vs Head' tug of war!

Attachment 1393229

Let me simplify that equation - Higher price generates less demand for a product and lesser price will trigger a rise in demand. Now this rule has an exception which is any product that results in status of an individual. such goods are the luxury goods including cars. In economics they are known as Veblen goods for which customers are willing to or would rather want to pay that higher price over a similar non luxury product because that luxury products gives them a higher status in society. Hope I helped you get rid of that mental barrier
Customers for whom status weighs more over utility wouldn't go in for comparison of cars into details of space, resale value, maintenance costs etc because such customers can afford these. So to answer your question in all humility - People will prefer Q3 over Fortuner because Q3 will give some an elevated status in society and for some maintain that elevated status. You are right! the pull of 4 rings is magnetic

[pgsagar]

Originally Posted by Accent Martin

People will prefer Q3 over Fortuner because Q3 will give some an elevated status in society and for some maintain that elevated status. You are right! the pull of 4 rings is magnetic

I don't think anyone will prefer a pint sized Q3 over behemoth of a Fortuner. May be in metros but not in smaller towns. Even in metros those who buy Q3 never probably had a Fortuner on their radar. May be they choose Q3 over a premium sedan. Some may buy because of parking constraint. In any case those who know how reliable these German cars are will stay away. These cars can just keep on dreaming of attaining Toyota reliability. Also, I don't think a Q3 or even a Q5 is a status symbol any more. Q7 may be. An X1 or Q3 are at the lowest rung of German cars and they are built to a price just to cater to a segment who will be happy with a logo on hood and not much else. These basic cars do not exude top quality like higher end German cars do.

[arunkumarsarat]

Originally Posted by Accent Martin

In economics they are known as Veblen goods for which customers are willing to or would rather want to pay that higher price over a similar non luxury product because that luxury products gives them a higher status in society. Hope I helped you get rid of that mental barrier
People will prefer Q3 over Fortuner because Q3 will give some an elevated status in society and for some maintain that elevated status. You are right! the pull of 4 rings is magnetic

Some products are purchased not because of their usefulness, but because they confer a certain level of prestige to the owner. It has been noticed that the demand for such products falls if companies reduce their prices since the wealthy customer no longer gets the status associated with the purchase.

This phenomenon was first identified by the economist Thorstein Veblen and hence these goods are referred to as Veblen goods. If the price of diamond was to fall to very low levels, the rich would boycott the stone. Luxury cars are also another good example.

Most of the successful companies, have over the years, build up a brand name and tries to position their products accordingly. Thus the German trio in our country caters to a premium luxury segment and they know enough economics to keep their prices high to sell more.

[Acharya]

Originally Posted by GKR9900

I mean, why would anyone want to buy a Q3 instead of a Fortuner? (Overpriced-yes, but at least you get more space,go anywhere capability, low maintenance costs, bullet proof reliability and good resale value) May be the pull of the four rings is too alluring.
Attachment 1393229

On one hand many people find Fortuner just the right SUV, there are folks who get turned off by it's sheer size, big turning radius, bouncy ride and lack of premium interiors (no offence to Fortuner owners).
For city drives, Q3/Q5 make great sense (if you have the moolah) given their high ground clearance, high quality interiors, better ride and compact size (vis-à-vis the Fortuner).

[Chrome6Boy]

Originally Posted by itwasntme

Silly money IMHO.

Let us consider the prices of the non-discounted OTR prices of Skoda in Bangalore:
Octavia (DSG Elegance): Rs. 26.4 lakhs
Yeti (4x4 Elegance): Rs. 27.8 lakhs
Superb: (DSG Elegance): Rs. 33.3 lakhs!

As context, I bought my Cruze LT for 14.8 lakhs in July 2011. Even after factoring in the Skoda brand, the DSG (with its own pros and cons!) and what-not, can I honestly perceive these vehicles as worth my hard-earned money?

Am at a complete loss as to what to buy as an upgrade which will appeal to me for the next 5 years. But 33 lakhs? That is what I took as a 85% home loan in 2003 :-(

I am in a very similar situation. I bought my Cruze LT for 14.3 lakhs in August 2011 in Chennai. I really like the looks of the Skoda Octavia DSG as a replacement but the price is almost 10 lakhs more for a car in the same segment just 4 years later!

I am leaning towards the Vento DSG now which will cost almost as much as the Cruze did 4 years ago. Maybe I need to start earning more.

[GKR9900]

Originally Posted by arunkumarsarat

Most of the successful companies, have over the years, build up a brand name and tries to position their products accordingly. Thus the German trio in our country caters to a premium luxury segment and they know enough economics to keep their prices high to sell more.

I think I can understand that logic. But I fail to see why these manufacturers choose to position their products so high up the price ladder in a country like India. From what we know, these German cars are much cheaper in developed nations than in India.

Attaching prices I could find online for BMW 335i xDrive and 328d xDrive sedans in the US.




If you calculate the MSRP in those pics in Rupees, the 335i xDrive comes around 30 lac rupees and the 328d xDrive comes around 25 lac rupees. Do note that these are higher spec'ed versions of the 3'er available here which retails at around 46-47 lac rupees. AFAIK, BMWs are still considered premium in the US. Considering the high manufacturing costs that would have been incurred by BMW in a country like US, why are the costs still so high in India where manufacturing costs are substantially lower? Shouldn't it be the other way round? How can taxes alone account to such huge price fluctuations? Am I missing something here?

Our motorcycle brethren provides another side of the same story. The KTM RC390 and RC200 was launched at mouth-watering prices by their 'Make in India' policy. An RC390 priced at $5499(3.5 lac rupees) in the US is available for almost $3900(2.5 lac rupees) in India. Even Harley Davidson got the pricing right with Street 750 at $7500(4.8 lac rupees).

Would love to hear fellow members' views on these figures.

[jayded]

It's one of those times when you wish you were more of a biker than a car enthusiast. By the time you mint enough money to buy a particular car, it would've gone up a whole segment higher. A then 10 Lakhs hatch becomes 12-13 lakhs in 3 years. I just feel downright jealous thinking about bikers who have these mouthwatering Duke 390s for 2 Lakhs, Ducatis and Triumphs for 7 lakhs. The car equivalents of this segment in bikes start at 30 lakhs plus.

[Acharya]

I feel INR 10 lakh is the new 4 lakh and 50 Lakh is new 30 lakhs (compared to 5-6 years ago).
One thing which continue to surprise me is prices of most premium vehicle have gone into the next segment (e.g. C2 ->D1, 3 Series to 5 Series) but they continue to sell in good numbers.

Forget about the scorching sales of Ze German Trios, even cars like Corolla, Octavia, Innova are burning the sales charts with almost double their pricing, compare to 4-5 years ago.
This certainly gives a feeling that the economy, especially the 'Have' class, doesn't have any dearth of money in India.

[apachelongbow]

why blame the Germans alone? At least the German brands have a brand value to speak of. Only in India does a low value brand like Toyota launch a third world hearse van, as a MUV call it Qualis, price it at a premium and get high sales. Then they continue launching an outdated taxi cab as Innova and charge close to 20 lacs for it. They then get encouraged and launch a bare basic SUV based on a pickup truck frame, put in their Innova interiors and price it close to 30 lacs!!!
All this while the Indian public lap up all this from Toyota at the same time singing praises of quality and what not!!

[srishiva]

Originally Posted by GKR9900

I think I can understand that logic. But I fail to see why these manufacturers choose to position their products so high up the price ladder in a country like India. From what we know, these German cars are much cheaper in developed nations than in India.

Attaching prices I could find online for BMW 335i xDrive and 328d xDrive sedans in the US.

Attachment 1395003
Attachment 1395004

If you calculate the MSRP in those pics in Rupees, the 335i xDrive comes around 30 lac rupees and the 328d xDrive comes around 25 lac rupees. Do note that these are higher spec'ed versions of the 3'er available here which retails at around 46-47 lac rupees. AFAIK, BMWs are still considered premium in the US. Considering the high manufacturing costs that would have been incurred by BMW in a country like US, why are the costs still so high in India where manufacturing costs are substantially lower? Shouldn't it be the other way round? How can taxes alone account to such huge price fluctuations? Am I missing something here?

Our motorcycle brethren provides another side of the same story. The KTM RC390 and RC200 was launched at mouth-watering prices by their 'Make in India' policy. An RC390 priced at $5499(3.5 lac rupees) in the US is available for almost $3900(2.5 lac rupees) in India. Even Harley Davidson got the pricing right with Street 750 at $7500(4.8 lac rupees).

Would love to hear fellow members' views on these figures.

In 1999 my 3 series cost me around 29 or 30K (323i, not Xdrive). I dont think they manufacture any cars (not SUVs) in U.S (but still cheap). The prices have not moved that high but features have been added which is not the case in India.

[Accent Martin]

Originally Posted by GKR9900

I think I can understand that logic. But I fail to see why these manufacturers choose to position their products so high up the price ladder in a country like India. From what we know, these German cars are much cheaper in developed nations than in India.

Attaching prices I could find online for BMW 335i xDrive and 328d xDrive sedans in the US.

Attachment 1395003
Attachment 1395004

If you calculate the MSRP in those pics in Rupees, the 335i xDrive comes around 30 lac rupees and the 328d xDrive comes around 25 lac rupees. Do note that these are higher spec'ed versions of the 3'er available here which retails at around 46-47 lac rupees. AFAIK, BMWs are still considered premium in the US. Considering the high manufacturing costs that would have been incurred by BMW in a country like US, why are the costs still so high in India where manufacturing costs are substantially lower? Shouldn't it be the other way round? How can taxes alone account to such huge price fluctuations? Am I missing something here?

Our motorcycle brethren provides another side of the same story. The KTM RC390 and RC200 was launched at mouth-watering prices by their 'Make in India' policy. An RC390 priced at $5499(3.5 lac rupees) in the US is available for almost $3900(2.5 lac rupees) in India. Even Harley Davidson got the pricing right with Street 750 at $7500(4.8 lac rupees).

Would love to hear fellow members' views on these figures.

Good argument. I have come to understand that in India, people working in the ITES and financial services industry will get hikes between 10 to 30 percent year on year where as the same industry in the US will provide around 5% increment every year. (This is just a sample comparison)

Basis indices on inflation and affordability in countries, I am certain that 38,000 dollar car is indeed expensive for people in the US

[Nithesh_M]

Originally Posted by apachelongbow

why blame the Germans alone? At least the German brands have a brand value to speak of. Only in India does a low value brand like Toyota launch a third world hearse van, as a MUV call it Qualis, price it at a premium and get high sales. Then they continue launching an outdated taxi cab as Innova and charge close to 20 lacs for it. They then get encouraged and launch a bare basic SUV based on a pickup truck frame, put in their Innova interiors and price it close to 30 lacs!!!
All this while the Indian public lap up all this from Toyota at the same time singing praises of quality and what not!!

1) So you are okay with Germans charging a premium because of their "supposed" brand value despite ranking below the Japanese in terms of affordability, reliability and long term maintenance but if somebody else with a reputation of prolonging the above 3 criterias does it, suddenly you require gold plated engines to justify the premium as you mentioned in the CBR650F thread? To quote your post just a few hours ago:

Originally Posted by apachelongbow

unless Honda provides a gold plated tank, it doesn't justify the premium.

Aren't you cherry picking your preferences here?

2) Toyota, the car maker that has a very large sales volume around the world and is lauded for reliability, affordability and safety is a low value brand? Please do a thorough research to see the most reliable manufacturers irrespective of the country around the world, there's always a Toyota amongst other Japanese manufacturers. As for the Qualis being the only one, well let me remind you there was also a Chevy Tavera that was competing in the segment and was later fined for fudging emissions data to sell polluting cars in India.


3) Incase you didn't know, almost every other SUV in the world is based on a successful pickup platform. The pickup platform you seem to speak so lightly of is the Toyota Hilux series, arguably one of the, if not the best series of Offroad vehicles in the world who's safety, reliability and engineering was well showcased on a TopGear episode "Killing a Toyota".

4) Toyota's entry level hatchback, the Etios Liva is a 4 star Latin NCAP rating car. In contrast, India's largest selling cars are zero star rating heroes, but that didn't stop you from owning one yourself. So why point fingers at other fellow Indians who pretty much did what you just accused them of doing?


Also, please go through something called the KANBAN system and see how it changed automotive production post 1940s. I doubt manufacturers around the world would employ it in their production line down the years.

[apachelongbow]

Originally Posted by Nithesh_M

1) So you are okay with Germans charging a premium because of their "supposed" brand value despite ranking below the Japanese in terms of affordability, reliability and long term maintenance but if somebody else with a reputation of prolonging the above 3 criterias does it, suddenly you require gold plated engines to justify the premium as you mentioned in the CBR650F thread? To quote your post just a few hours ago:


Aren't you cherry picking your preferences here?

2) Toyota, the car maker that has a very large sales volume around the world and is lauded for reliability, affordability and safety is a low value brand? Please do a thorough research to see the most reliable manufacturers irrespective of the country around the world, there's always a Toyota amongst other Japanese manufacturers. As for the Qualis being the only one, well let me remind you there was also a Chevy Tavera that was competing in the segment and was later fined for fudging emissions data to sell polluting cars in India.


3) Incase you didn't know, almost every other SUV in the world is based on a successful pickup platform. The pickup platform you seem to speak so lightly of is the Toyota Hilux series, arguably one of the, if not the best series of Offroad vehicles in the world who's safety, reliability and engineering was well showcased on a TopGear episode "Killing a Toyota".

4) Toyota's entry level hatchback, the Etios Liva is a 4 star Latin NCAP rating car. In contrast, India's largest selling cars are zero star rating heroes, but that didn't stop you from owning one yourself. So why point fingers at other fellow Indians who pretty much did what you just accused them of doing?


Also, please go through something called the KANBAN system and see how it changed automotive production post 1940s. I doubt manufacturers around the world would employ it in their production line down the years.

Indian Toyota doesn't have a 4 star rating. Only a 5 star price. 30 lacs for an atrocious ride , lack of decent interiors makes only a utility vehicle not justifying the big cash asked. Most SUV are going monocoque now, ladder on frame justification as tough etc doesn't cut it. Also basing a suv on a pickup should lower costs not justify an increase. And don't mix up separate threads to make a point.
BMW is an aspirational brand Toyota is not, it doesn't change no matter KANBAN or not.