[invidious]

Friend recently picked up an A class limousine. He already owns an E Class, C Class and a 5 series. Almost crestfallen, he told me this is the last German car he will buy with the crazy pricing. Snob value lasts for one car maybe and then reality sets in. If I am well off, why do I need some kind of affirmation from anyone else?

Some of these cars are just not practical either.

[AKSarkar1]

Luxury cars are suffering from a catastrophical case of overpricing in India. The exorbitant ex-showroom prices coupled with the high tax rates make it almost unaffordable for a good chunk of prospective buyers to materialize their dream of owning a luxury car.

Needless to say, many people these days are going in for pre-owned cars. They purchase the car for a fraction of the price, use it for a couple of years and when the maintenance premiums start stacking up, they simply flip the car and repeat the whole cycle again. This is undoubtedly yet cheaper than buying a brand new BM/Merc/Audi.

[amitverma]

Originally Posted by siren373

I strongly feel that the number one reason for the stagnation is crazy costs around maintenance and repair.

I really doubt that is the case. Most of the buyers opt for extended warranties which cover almost everything except wear and tear. The service intervals are 15k kms, which for 90% of the buyers would be their yearly mileage. Paying 50k-100k in a year isn't too bad.

The stagnation is mostly because of the steep increase in prices in the last 3 years or so. Back in 2020, I was about to buy a 530i M-sport for 57 lacs (post discount OTR Delhi) before covid struck and ruined all plans. I cant even get a 3 series for that price now. While 5 series stands discontinued, its last recorded price was around 74. You can only wonder how much further would the new 5 series take this figure.

[shankar.balan]

In 2020 or so one could buy a Mercedes GLC top spec at 52 lacs and a Mercedes GLE for 89 lacs. Now I think a GLC is around 90-95 lacs and the GLE has hit 1.6 Cr.

Why is it that the ‘Prestige Marque’ pricing has doubled in 4 years?

[.HEM]

This is the quote for the underbody spares for my 2011 W212 E350 from the Authorised service centre. I have a Mechanic friend and a FNG. We were able to source Febi Bilstien and Sachs OE spares for 80K and completed the service within 1lakh budget.

Car buyers are not interested to spend so much for a car that is nearly 13 years old. One thing that I still admire about the German cars is: my 2013 Ertiga is showing off its age, but this 2011 Merc E class still smells new and gives me a smile when I push the throttle.

[Livnletcarsliv]

My thoughts are completely against the tide for most of the previous comments.

Yes it is true that the cost difference is more between the main stream brands and the luxury brands. But is it only happening in the auto industry? What about smart phones, TVs, 2 wheelers, PCs, etc. For eg the cost difference between an iphone and a oppo/redmi/xiaomi, etc are also significant with absolutely unjustified value for that high cost of the iphone.

Another significant factor is the demographical landscape and economic situation of our country which determines the cost of anything. India is neither rich nor poor. Our demograhical diversity is complex. So obviously the tax structure will be high for non-essential goods.

Yet the most important factor that I see for almost flat/reducing sales numbers (even across the world) is lack of innovation in the luxury/premium segment. Even 10-20 years back, a luxury brand will be way advanced and great in numerous aspects like lighting tech, engine performance, infotainment features, passenger/driver oriented features, even wiper tech, etc. But today, where and what is the exclusivity of the luxury brands? In fact, today it is quite the opposite that main stream brands are quite advanced in terms of many aspects than the luxury brands - not just in India but anywhere in the world.
If the Century SUV can compete with Rolls Royce Cullinan with everything and more that the Cullinan has including the exclusivity at half the price, then what is the value proposition or the USP of Cullinan? If a Seltos/XUV700/Tucson/Tiguan is more powerful, more feature rich, more tech loaded, more reliable and significantly low cost maintenance, than a BMW X1 or GLA or even X3, E-Class, etc, then why should anyone spend at least 50L more just for the luxury brand and marginal increase in the luxury factor?

Luxury/Premium factors then and now are worlds apart with the speed at which the tech innovation and advancement is moving. If anyone can use a smart phone today from <10K, what is the USP of such an expensive iphone ? Again, here China has a major share of transformation and innovation to make this shift happen (Whether China is good/bad, done right/wrong are the topics of discussion for another day). The manufacturing prowess of China, and their fast paced transformational and technological adoption including shift in their cultural mindset are significant.

As someone rightly said, in no time, luxury brands in India most likely will pull the plug of all their entry level models (even unsurprisingly globally) and focus only on"pure luxury and high end models" which will also help them to sustain and maintain their identity. Even then innovation is a MUST for these luxury brands.

[84.monsoon]

The major drift of opinion in the thread is that sales are lower due to unreasonably high pricing and this is definitely an important factor. However, remember that it is not just the number of units sold that luxury car manufacturers are focusing on, it is also the net realisation and average realisation across the whole fleet. For the most desirable models, there is a demand for CKD kits across all global markets. The issue of demand outstripping supply has not fully resolved, and gets frequently worsened by recent events such as piracy in the Red Sea.Markets that can realise higher profits are able to get more kits allocated.

The result is what we experience in terms of long waiting times for popular models such as the BMW X5 or the Mercedes GLC. I am not saying the sales numbers will go up substantially were the supply issues to go away, But it would definitely improve as discounts will reappear once supply is plenty. Large discounts in the 15% range used to be not uncommon pre Covid and drove year end volume spikes. Such discounts have been rare and smaller in percentage terms in recent times (especially BMW and Mercedes) and this is also driving lower sales.

Of course there are less desirable models which are quite far down their life cycle (e.g. the 330i) for which kits are available in plenty and the manufacturer could sell in higher volumes at lower prices without any supply constraints. However, one or two models cannot be priced off the grid as it will distort the overall brand pricing strategy and line up.

[Zippy_wheels]

If we factor in the purchases made by government, politicians, 5 star hotels, corporates etc., the number of actual individual car buyers would be way lesser for these luxury brands. For these buyers it is just the brand that matters - they are not much concerned about bhp, maintenance etc. So, these brands are selling much lesser cars to individuals/car enthusiaats who have to pay out of their own pocket and spend money they earned through honest means.

[fhdowntheline]

Originally Posted by Livnletcarsliv

My thoughts are completely against the tide for most of the previous comments.

Yes it is true that the cost difference is more between the main stream brands and the luxury brands. But is it only happening in the auto industry? What about smart phones, TVs, 2 wheelers, PCs, etc. For eg the cost difference between an iphone and a oppo/redmi/xiaomi, etc are also significant with absolutely unjustified value for that high cost of the iphone.

Luxury/Premium factors then and now are worlds apart with the speed at which the tech innovation and advancement is moving. If anyone can use a smart phone today from <10K, what is the USP of such an expensive iphone ? Again, here China has a major share of transformation and innovation to make this shift happen (Whether China is good/bad, done right/wrong are the topics of discussion for another day). The manufacturing prowess of China, and their fast paced transformational and technological adoption including shift in their cultural mindset are significant.
Even then innovation is a MUST for these luxury brands.

My thoughts to the above:
1) India is aiming to be where China is right now in terms of manufacturing. Not necessarily innovation and tech leadership, unfortunately. So we will get more Xiaomis, Vivos, perhaps some cheaper IPhones too. Applying this to automobiles, the duty structure needs to change to make luxury cars competitive.
2) IPhone is somewhat justified in their price because they offer a seamless, reliable than most experience within their ecosystem. That is a result of not just innovation in which they go back-and-forth with the Android world, but sustained quality (especially software).
Applying this to the automotive world, I dont think the luxury marques necessarily have sustained high levels of quality and reliability as compared to the other cars.

[corpArMa32]

Because most people can get massively better VFM for vehicles half the price? Luxury manufacturers are relying too much on the usual indian mindset of their badge being something to brag about when they could easily reduce prices to sell a lot more units. They bring in CKD cars and sell at CBU prices because they know some people will pay the premium. They basically sell premium mass market cars labelled as "Luxury cars" and they got away with it until the Korean invasion.

Hope the Japanese also get their thing together and put an end to this German price gouging and treating Indians like legit 3 world country people who will do anything for a German badge validation. Even buy a terrible car like X1 or Q3 for 3x its actual worth.

[nareshtrao]

Originally Posted by GTO

7 years back, Mercedes averaged 1277 cars / month (2017 sales = 15330). All these luxury brands are stuck in the same old rut of 1000 odd cars a month. One reason is their overpricing.

Very right. However, it also seems that they are not keen to change that either. The move to "potentially" higher growth will need management will and risk-taking decisions which possibly will reward them but then if they are able to generate the same level of margins (with the nominal growth they call their targets), why trouble with higher volumes, more operational costs accompanied by sunk investments in plant expansion, storage, distribution and to top it all, increased labor cost?

The way they have positioned the brands, nominal volume growth has led to profitable margins with lower headaches of operations while maintaining the niche image of the brands and increasing "aspirational" value they like the brand to be attached with.

So as you said, the 30-50 L product segment from other brands is now well serving the discerning and aware car-buyer while providing all the bells and whisles and reliability at a lower cost delivering higher value.

If we were to have this discussion on the 30th year of Team-Bhp, I am certain the numbers will be no different.

Unless one of the major brands leads with a revolutionary pricing and a significant "market expansion" move, none of the rest will. We will see similar numbers for another generation.

[poloman]

In addition to the stratospheric pricing, the main reason why these cars are stagnating is the huge depreciation in value in first few years. Only business people who can set off depreciation as loss in their books can tolerate such losses year over year. And they keep these cars for less than 5 years for which depreciation is the most.

An IT professional earning 1-2 Cr per annum can easily afford these cars but may never show interest due to poor resale value due to high depreciation and maintenance costs.
Indians in general are averse to high depreciating assets.

[ramki.grandhi]

One more important aspect I can think of is, though Indians pay exorbitant prices(be it taxes, service costs etc), we do not get any feature that is termed as "built for India". For example, last year's GLC was having seat warmers but not cooled seats. Honestly this is an insult in our face, and shows how much Merc cares about Indian market. I know its a small market for these luxury car makers but they hardly put any effort on localization to bring down prices. So, sometimes I feel government is doing the right thing by not bringing down taxes on luxury car makers. I know every company is greedy, at least companies like Toyota, Skoda, Honnda puts an effort to localize and run the business.

[avira_tk]

The reason these cars are bought is for social validation of your success, yes exceptions exist, you can't take your house around, the car does the advertising. Today, you need to own a real exotic to signal, a regular car won't do, regular because these cars are available to everyone and there are discounts available too.

A rich businessman who has owned quite a few Mercs over the last two decades said that he prefers travel overseas to getting a fancy ride. Look at it this way, if you have a 60 lakh loan on a car that's a payout of 14 of lakhs a year to service the loan, in return you get massive depreciation, high service costs and heartburn when some two wheeler/vandal damages the paint. Instead, you use half of that to travel to some exotic locale each year, the experience tops any car ownership and yes social media posts will get more likes. Posing in front of your car is meme material at this point.

[Livnletcarsliv]

Originally Posted by fhdowntheline

My thoughts to the above:
1) India is aiming to be where China is right now in terms of manufacturing. Not necessarily innovation and tech leadership, unfortunately. So we will get more Xiaomis, Vivos, perhaps some cheaper IPhones too. Applying this to automobiles, the duty structure needs to change to make luxury cars competitive.
2) IPhone is somewhat justified in their price because they offer a seamless, reliable than most experience within their ecosystem. That is a result of not just innovation in which they go back-and-forth with the Android world, but sustained quality (especially software).
Applying this to the automotive world, I dont think the luxury marques necessarily have sustained high levels of quality and reliability as compared to the other cars.

1. I still WISH India there. India is aiming this for many years now. Unfortunately it is not happening anytime soon (at least not in this or next decade). And there are numerous reasons for that - We just cannot blame the government (India) alone. I also don't have any hopes that we will get Indian branded likes of Xiaomi/Vivo/Oppo at all. I don't see anything in the horizon.
2. There is no somewhat justification here. Even though I am an apple fan (iPhone only), I still don't see the justification of 2-3-5-8 times the cost of an average smartphone. So iPhone is definitely a luxury proposition. And Apple is successful in that. While I say that, even luxury car makers are successful and profitable. India is a different case though where they (luxury car makers) don't care about the volume. They still want to be exclusive with high price while profitable at the same time. In other countries, the cost of X1 and Tiguan/Tucson overlap. But here X1 is 20L more than a Tiguan. And they purposefully do this to maintain the brand exclusivity. But I don't see this sustaining long term as India is still a price sensitive market be it for rich or middle class car buyers.