[Annibaddh]

Originally Posted by SmartCat

Reason for this unusual phenomenon is Economies of Scale.
https://en.wikipedia.org/wiki/Economies_of_scale

Excellent point, and the comparison with the 2-wheeler market is such a great example to make the point. I have just one small addition to make. One big shift in the auto markets is now cars come with an expiration date. Dare I say, even designed to fail at a certain age. From engine blocks to the very structure of the car, parts are not built to the same quality and heft as earlier. Of course more modern alloys make it easier to shed weight but that’s not all that is going on. Car makers have realised the upgrade culture made ubiquitous by the cell phone and apparel industries - as indeed have other industries - and are unlocking revenue streams by doing everything from designing cars which do not need to be as robust and fail safe, to even building more software and subscriptions to generate long lasting revenue streams. As penetration increases, growth has to come from somewhere! Another reason for “features” taking over genuine engineering innovation. And reducing upfront purchase prices.

[shankar.balan]

Originally Posted by Annibaddh

I have just one small addition to make. One big shift in the auto markets is now cars come with an expiration date. Dare I say, even designed to fail at a certain age. .

Planned obsolescence encourages the replacement economy which in turn stimulates consumption behaviour which in turn drives the manufacturing and production engines.

Creating an endless loop of a virtuous or vicious cycle, depending on where you stand.

We used to repair and reuse. Now we just replace.

[Auto_guy_101]

Adding my 2 cents here:

Firstly, I agree that cars are somewhat more affordable in general today, due to a multitude of reasons. But this affordability comes at a cost in most cases, like the below examples:

Take a Virtus vs the Vento, cars about a decade apart, with a stark difference in quality. One was an entry level German Saloon coming to India, the other a prime example of a fun to drive sedan. This is the same segment (even the DQ200) but value proposition has changed.

Take the Maybach or S class which today come with a lot of add-on features (or packages). All these niceties, which are creature comforts of the present era drive up the price. Then there are cars which have settled for smaller engines, different tunes, abandoned diesel etc.

Sure, cars are eventually going to become more affordable due to economies of scale and older technology trickling down to more mass market vehicles. At the same time, some brands will try to maintain their prices, premium-ness or image by trying to keep a high entry barrier or tiering their offerings. For example, the long term service bills of an Octavia/ Superb which roughly cost 2x a Slavia are much more than 2X the Slavia's bills.

Hence, the increasing spread of middle class income is also going to create further income tiers, making it harder for people to upgrade their cars into the higher segments. Some subscription models from brands in recent times further worsen the situation, and so do regulations.