[amitk26]

Price is what a consumer is willing to pay and not what it costs to produce.
The example Dr. Singh quoted below is perfect example of velben goods in economics theory. I quoted the same in context of iPhone pricing somewhere.

Cars in Indian context are Velben goods and that is the reason Nano did not sell well , Afterall fires happen in almost every vehicle in India be it Audi Q7 or Honda City but only Nano sales get impacted by such visuals.

Originally Posted by drsingh

When he was younger he took his wife shopping and after two hours she selected some saris one of which was more expensive at 8k rupees at the time .
So this man then proceeded to sit down with the owner and gave some references and negotiated the price down to 3.5k rupees.

As soon as his wife learned of the negotiated price, she lost all interest in the sari and refused to buy it :-)

So the next time a noob asks you about your spanking new ride, and instead of asking about the 'engine, ride or pickup', throws this question at you - - - " kitne lakh ka gaadi hai?" , don't be surprised

[Jeroen]

Originally Posted by jinojohnt

Aren't the Insurance and Labor (Service) expensive in the West? Does that mean the total cost of ownership remains roughly the same as that of india?

Yes they are. Service cost (labor) in Europe is very high compared to India.

In the Netherlands, at an authorised car dealer, you will likely be being charged between Euro 55 - 75 per hour (INR 4500 - 7000). Independ garages would charge a little less, but not by much.

From my own experience (car) insurance differ wildly between Countries anyway. I'm paying around Euro 300 per year for our 1998 Ford Fiesta, third party only. All my other cars are insured on classic and or young timer insurances and that makes comparison very difficult. But I'm sure it will be expensive, especially fully comprehensive insurance.

I was paying around USD2000 per year for my Jaguar XJ in the US. (fully comprehenisve) But that was partly because I was new into the USA, with no credit history and they did not regocnize my no-claim bonus from Europe.

Cost of ownership has many different components in it, but in the West the big parts are depreciation and fuel. Again, fuel in India is a lot cheaper then in most of Europe. On depreciation I really dont know about India.

I think that comparing TCO between India and other countries might not take into consideration a very relevant factor, disposable income. Expensice, costly, cheap are relative factors. And they are very closely tied into a countries average cost of living and disposable income.

So just because on a TCO basis a car is more expensive or cheaper in one country to the next doesnt really mean much.

You might want to redefine what being ripped off really means. Very few of us would admit to buying something that we feel is worht its purchasing price. So how can you be ripped off in the first place. Just because it's cheaper somewhere else? I've never understood that.

I buy what I need, like and can afford. Do I feel cheated/ripped off if I see the same item advertised cheaper a week later. No, because at the time of my purchase I thought it was good price. So the feeling of "being ripped off" is just being offended retrospectively on your own purchasing choice.

If you don't buy your're not ripped off. If you buy something, I assume you buy it at a price that you will is fair and gives sufficient value for money.

For me the above works fine in any free market with sufficient (commercial) players and competition. If you lack choice you might feel ripped off. When I lived in Kansas City USA there was only one party providing TV and Internet services. And I ended up paying nearly five times as much as I did in the Netherlands. No choice, well the choice of having no television and internet wasn't a realistic one.

Jeroen

[tsk1979]

Most new cars(even ones manufactured locally) involve taxes as 40% of the final value.I think that has a lot to do with the pricing.