[dragracer567]

A lot of factors affect car prices worldwide, these include but are certainly not limited to:

1) Whether it's locally manufactured, assembled (CKD) or imported (CBU)

2) Local/import taxes imposed

3) Features available in the market

4) Variation in built quality

5) Shipping costs for CKDs and CBUs

6) Manufacturing costs (labor costs, automation etc.)

7) Tertiary factors like brand image, local purchasing power, and economies of scale.

Now, I have tried to use three different cars - the Suzuki Swift, the Toyota Camry Hybrid, and the Mercedes S450L as indicators of how car prices vary by country. I have used the 'median' (a median is a value separating the higher half from the lower half of a data sample) as a statistical measure as taking the average would skew the results too much due to huge anomalies in some countries (like Singapore for instance where car prices can be eye-wateringly high). I must confess, I slept through my statistics classes in both my Bachelors and Masters degree programs, so someone with a better knowledge in statistics could enlighten me on a better indicator to use here

Now, while I've taken the base prices of all the cars in the respective markets, this measure isn't perfect because all markets don't get the same car. The Swift sold in the UK and Germany for example have a myriad of safety features like multiple airbags and automatic braking which aren't available even in the top variants in India. Also, the Camry Hybrid sold in India and the UAE are available only in top-end trims, so prices will obviously be higher and many markets don't get the hybrid (and hence left out of the Median calculation).

With regards to the markets, I've tried to be as inclusive as possible with representative countries from most geographic locations. I've purposely left out the fellow SAARC countries as I believe they deserve their own post.



Offcourse, I'd really appreciate some feedback on how this could be done differently! Cheers

[GTO]

Taxes is a major contributor, but also important are the economies of scale. The Camry sells 3 - 4 lakh copies every year in USA; here, it's more like ~1000.

Also check out Ajmat's thread from a decade ago - Are Indians being ripped off?

[McLaren Rulez]

You should give this a name. Perhaps the Corolla index (like the Big Mac index)

[DicKy]

Originally Posted by dragracer567

.
Now, I have tried to use three different cars - the Suzuki Swift, the Toyota Camry Hybrid, and the Mercedes S450L as indicators of how car prices vary by country.
Offcourse, I'd really appreciate some feedback on how this could be done differently! Cheers

Great topic. And selection of models. Though I would suggest the Corolla instead of Camry, since outside of North America, GCC nations, Australia etc. the Camry is seen less as a family car and more as an executive/quasi luxury car.

When we look at it, except for our favourite brands/models, in sense of overall TCO we are way better than many countries. Though the places where we are familiar with ; GCC, USA, Canada, Australia, Malaysia has it easier than us.

Originally Posted by McLaren Rulez

You should give this a name. Perhaps the Corolla index (like the Big Mac index)

Guess something like that already exists.


https://www.team-bhp.com/forum/india...ml#post3483453 (Cars we wish manufacturers would launch in India)

Here is something I posted about five years ago.
Price points have changed, but the scenario remains the same.

Reiterating the point. Most of our sales/choices are below 10 lakhs, and increasingly now under 15 lakhs.

Ofcourse our cars are decontented to the core, but the fact remains we can buy a brand new air conditioned car for under 4 lakhs. The cheapest model in most countries start at 10 lakhs. Yeah, they are safer and better built. But get the drift, right.

But the problems starts at 15-25 lakhs price range.

Most of the car markets that we look into have everything from family cars, minivans, trucks, coupes, muscle cars, SUVs, i4, V6, V8 fit into that price range. Atleast their base variants.

What do we have? A few crossovers, sprinkling of sedans and a couple of BOF UVs.

[dragracer567]

Originally Posted by DicKy

Great topic. And selection of models. Though I would suggest the Corolla instead of Camry, since outside of North America, GCC nations, Australia etc. the Camry is seen less as a family car and more as an executive/quasi luxury car.

Actually, I thought of using the Corolla but decided to use the Camry instead because the Corolla isn’t sold in India anymore. Also, I believe Toyota sells more Camrys than Corollas in both the GCC and the US now

And you are absolutely right about the spending power. For whatever reason, the wages and hence the spending power of an average middle class Indian is much lower than even other developing countries which has lead to an entire ecosystem of cheaper products for India (like the Suzuki Alto and ultra cheap smartphones).

Originally Posted by McLaren Rulez

You should give this a name. Perhaps the Corolla index (like the Big Mac index)

Actually, the prices of the Toyota Corolla (or equivalent) and the VW Golf (or equivalent) are used as some of the indicators for the standard of living of a certain place. However, I’ve always wondered what would be the ‘equivalent’ model they consider in India since neither are sold here now.

[landcruiser123]

Nice thread. But we've to understand that culture, weather, and infrastructure of the country plays a huge role. Most countries see cars + gasoline as a cash cows.

According to my armchair analysis*, affordability of a Corolla in the US can be compared to decent 150cc motorcycle in India. Owning an entry level BMW 3 series ($40,000) in the USA is like owning an i10 in India. A person affording a Swift in Singapore can probably own an S-Class in the USA.

*Leave out the 1% ers in this analogy. They will own the same Ferrari, Lambhorghini, Rolls Royce whether they are in Durban, Delhi, or Dubai.

[Hemantteen]

I suppose Swift being so cheap in India is because it isn't the same swift. Once I saw a youtube review of Swift South Africa where both made in India and made in South Africa are sold concurrently. Indian made was cheaper , reason cited was poor build quality(literal death trap as said by the actual users in comment section).

[VijayAnand1]

Beautiful thread. landcruiser123's armchair analogy seems perfect. But there is more to what meets the eye. Apart from being a cash cow, the disposable income and GDP plays a big role in pricing determinant. India being a greedy composite, always have and always have pricing differential.

Cheers!
VJ

[GeeTee TSI]

Excellent analysis!

So the econo-boxes we get here are heavily subsidised if we just compare model name to model name (without getting into the components or kit) relative to European markets

Strangely, the premium and luxury cars we get here are way way more expensive to European prices where the models and trims are actually more comparable (Mid spec S class in India buys you a Bentley Flying Spur for the same money in UK!)

Neither seems to be an ideal situation, a reflection of how much more our market is yet to mature.

[aniyo]

I suggest one should take PPP into account when working in dollars. Actually we cannot simply convert $40000 into INR and say the car should cost $*75.

From a PPP basis we are worse off actually. Honda CR-V retails for some $25000 in USA in states with median salary of $40,000 that's about 60% of yearly income. In India it retails for 35L with a median salary of INR 1,50,000.
Even if we take the upper middle class to which the CR-V is actually targetted globally (only India its premium) it still expensive in India. One can blame taxes or Honda for it or we are underpaid etc.
See a upper middle class family will earn about $60-80K annually post taxes. And with new vehicle interest rates of 1-2% its damn cheap to own a $25K car.

In India a upper middle class family will earn INR 25-30L yearly and with new car interest rate at 8-9% and INR 35L for the CRV is outrageous. Esp with other commitments that we have and the fact we don't get anything for the taxes we pay, car ownership in India is tax on the people because government could not or does not want to move people out of poverty and the car is seen as a luxury item.

[dragracer567]

Originally Posted by Hemantteen

I suppose Swift being so cheap in India is because it isn't the same swift. Once I saw a Youtube review of Swift South Africa where both made in India and made in South Africa are sold concurrently. Indian made was cheaper , reason cited was poor build quality(literal death trap as said by the actual users in comment section).

A similar observation was made by a fellow Bhpian from Costa Rica who had a similar option between Indian-made and Japanese-made swifts though he went for the Indian one - link (Bought a LHD Maruti Swift AT in Costa Rica! Update: SOLD after 5 years and 75k km!)

Originally Posted by GeeTee TSI

Strangely, the premium and luxury cars we get here are way way more expensive to European prices where the models and trims are actually more comparable (Mid spec S class in India buys you a Bentley Flying Spur for the same money in UK!)

Neither seems to be an ideal situation, a reflection of how much more our market is yet to mature.

The biggest problem is that unlike western countries, the government has to depend on indirect taxes as most of the population are relatively poor and work in the unregulated sector where the concept of income tax does not exist. I suppose once our economy grows and employment get more formalized, indirect taxes will come down (unless the government gets too greedy).

Originally Posted by aniyo

I suggest one should take PPP into account when working in dollars. Actually we cannot simply convert $40000 into INR and say the car should cost $*75.

Very true indeed. I'll try to modify the data over the weekend taking into account the purchasing power of countries and see if I'm able to portray it in a meaningful way

[MUJ]

Excellent Analysis. I too accept Landcrusier123 armchair analysis. Taxes and Duties play an important role in determining the prices and the volumes sold.

In the lower segments there has always been a bit of compromise in the Indian Market (Safety features, build quality, change of platform) to make it more affordable. But in the high priced segments, its the Taxes that's to blame.

[chieftain]

This data is indeed missing the fundamental context of PPP. The PPP ratio, if you will, is roughly 3.86 right now (perhaps pre-covid, not sure what impact that will have). So you can consider the Camry for example to be a staggering 7 times harder on the pocket in India than it is in the States.

[sabujsen]

This is a great thread. I think GOI thinks that any car is a luxury. The tax rates are too high. The tax paid to the government should instead be put into the car to make it more safe.

[praraj1521]

I agree that the PPP aspect needs to be factored in. But in addition to that I think even pure economics of demand and supply plays a role. In the USA, Yearly car sales are at least 4 times that in India for a population that is 25% of India’s. China overtook USA in total car sales at least a couple of years ago.

Talking about China, I think it would be interesting to see if there has been a steady drop in prices for the same car segment in China when compared to, let’s say a decade ago when the demand was much less ?