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Old 17th December 2011, 17:16   #31
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Default Re: The downside of price cuts (for an existing owner)

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Originally Posted by shankar.balan View Post
Ultimately, it is what drives the individual. Does one buy something so that one can show it off to the world around one? Or does one buy something to derive private enjoyment from owning and using a truly superbly finished, well engineered and desirable product? That's a question that only each individual can answer!
Very well said. Automotive is not an investment of money, it is an investment of lifestyle.

I had bought Ikon Flair for 5.7L. In a short while Ford started selling the car around 4.6L. What to do? Is it under my control? No. So suck it up.
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Old 17th December 2011, 20:52   #32
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Default Re: The downside of price cuts (for an existing owner)

A rather different perspective from a honda city buyer pre discounts (my friend)
Quote:
"I paid what my pocket allowed and what I thought was the right price for the product , my neighbor paid what his pocket allowed (city after price cut) whatever be the situation he knows my pocket is bigger than his
whos the daddy!"
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Old 17th December 2011, 21:41   #33
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Default Re: The downside of price cuts (for an existing owner)

Here's a weird idea:

How about price of a car being discovered on a daily basis based on demand and supply. Trading in cars the way people trade in commodities. A lot of 1000 ANHCs being produced by let's say Honda in the next month would be available in the market this month for the highest trader. If people believe the price is high, the volume would drop and inventories would pile up, which would eventually bring down the price. On the other hand, because of a supply constraint or because of popularity, the demand may outstrip the supply and the manufacturer/dealer can sell the car at the highest price which the customer is ready to pay.

I mean, why decide prices arbitrarily and why revise them once/twice a year? Let the demand and supply situation decide the price on a everyday basis.

Last edited by SDP : 17th December 2011 at 21:43.
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Old 18th December 2011, 03:21   #34
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Default Re: The downside of price cuts (for an existing owner)

I own a preworshipped Ford Fusion and here are my 2cents.
Fusion however good the car was never picked up in the market even after the massive price reduction.

The Advantages and Disadvantages of price reduction can be observed as :

Advantages :
1. More Sales for company and longer life cycle of the product but must be advertised regularly after the price cut.
Reality : Can someone cite an example of sales zooming up like anything after price reduction and matching up of that of the segment leader or near that.

2. Easy availability of spares and faster service.
Reality : Do we really need spares that often. But it surely is an important feel-good factor resulting in peace of mind. As a Fusion owner I can vouch for that. I always worry about spares may be available or not even though I haven't needed them so far.

3. Good Resale Value.
Reality : First of all resale value is notional as it will only be realised on the day when you actually sell your car. If a customer is buying an overpriced car knowing it is overpriced and still buying it that means he is either having deep pocket or he believes that car is worth the premium. In first case, he is insensitive to price and will buy it in any case and resale value is of not much importance to him. In second case, he is buying after judging all the alternatives and is looking for long term use. After long term use the resale price anyway will not be much so as to bother anyone. By that time he would have also recovered his resale value loss partially by way of cheaper spare parts and service. Only when car is sold after short term or medium use, resale value loss is huge.

Disadvantages:

1. Lesser Features and Compromised Quality : This can be seen in case of Fabia. I have also read at so many places that the more localised cars have sub-standard interiors, want someone to throw some light on this particular point. I can say that much, when I got my Fusion serviced one mechanic specifically pointed out that yours is one of the earlier (before price reduction) model and quality of parts are good as most of them were imported. Waiting to see how Jazz and City perform on this criteria after price correction.

General observation :
As GTO rightly said and there is a saying 'First Impression is Last Impression'. It is very apt for the Indian Automobile Market.

I am amazed as people buying Honda cars were calling them VFM especially the V-MT (top end variant) and even using VFM tag for Jazz (before price reduction) and now Honda reducing prices.
In India nothing can be called exclusive other than price. The prices we are paying for the cars in comparison with other countries and quality we are getting is nothing but laughable. Here the car is still considered a luxury item rather than necessity. Only the government seems to benefit from all this.
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Old 18th December 2011, 09:18   #35
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Default Re: The downside of price cuts (for an existing owner)

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I am amazed as people buying Honda cars were calling them VFM especially the V-MT (top end variant) and even using VFM tag for Jazz (before price reduction) and now Honda reducing prices.
In India nothing can be called exclusive other than price. The prices we are paying for the cars in comparison with other countries and quality we are getting is nothing but laughable. Here the car is still considered a luxury item rather than necessity. Only the government seems to benefit from all this.

We pay much higher price for cars in India, in-spite of them being stripped down versions of the same models sold overseas. Some might argue that a good chunk goes into the govt. kitty as taxes, but we do need to remember that this amount is easily offset by cheap labor (wages, benefits, overtime pay, etc...) and parts here. So essentially, each and every manufacturer is ripping us off by 'offering' the so-called 'global' product at an inflated price.

Good to know that the market is maturing and heading towards realistic pricing (thanks to models like XUV500 and Hondas being forced to cut prices). These price cuts might not be a feel-good factor for existing owners, but if these happen across the board we'll definitely get more bang for the buck the next time we look around for a car
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Old 19th December 2011, 11:21   #36
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Dear Members, First of all, I don't buy in to the statement of slashing the price by localization of parts. Help me understand, how on earth you manage to squeeze Rs.150000 just by localization. I am talking about Honda (Jazz & City). While i respect Honda for putting all the required safety features without compromising on all variants, it is really hard to understand why should Honda overprice its cars for creating a false pride in us? Honda for all practical reasons, is a value for money car. Not a "PREMIUM" car in western world. I am sure many of us might have seen the movie "Gone In 60 Seconds". If you pay close attention, when they were planning for boosting 50 cars, there is reference that "we are not boosting 'CIVICS'. that tells more about the reality of Honda. I am not against Honda, I am just pointing that Honda's are Honda's not Merc or BMW or AUDI to price like this. On the same line, even Toyota is ripping us off. Help me with where on earth a "Carolla" is selling for 25K+ USD?
What will bother the initial owners is this, you are paying the road tax as a % on your invoice price. Now that the invoice price has come down by a Rs. 1 Lakh, you pay on an average 12K to 15K lesser road tax. Not just that, the prospective used car buyer can look at new car as the margin between what you expected resale value Vs New car has shrunk drastically because of the price cut or price reduction.
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Old 19th December 2011, 12:52   #37
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Default Re: The downside of price cuts (for an existing owner)

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Originally Posted by GetzLover View Post
Dear Members, First of all, I don't buy in to the statement of slashing the price by localization of parts. Help me understand, how on earth you manage to squeeze Rs.150000 just by localization. I am talking about Honda (Jazz & City). While i respect Honda for putting all the required safety features without compromising on all variants, it is really hard to understand why should Honda overprice its cars for creating a false pride in us? Honda for all practical reasons, is a value for money car. Not a "PREMIUM" car in western world. I am sure many of us might have seen the movie "Gone In 60 Seconds". If you pay close attention, when they were planning for boosting 50 cars, there is reference that "we are not boosting 'CIVICS'. that tells more about the reality of Honda. I am not against Honda, I am just pointing that Honda's are Honda's not Merc or BMW or AUDI to price like this. On the same line, even Toyota is ripping us off. Help me with where on earth a "Carolla" is selling for 25K+ USD?
What will bother the initial owners is this, you are paying the road tax as a % on your invoice price. Now that the invoice price has come down by a Rs. 1 Lakh, you pay on an average 12K to 15K lesser road tax. Not just that, the prospective used car buyer can look at new car as the margin between what you expected resale value Vs New car has shrunk drastically because of the price cut or price reduction.
GetzLover, some very good points there.
If a car is overpriced by a manufacturer, shouldn't the buyers show the manufacturer their place? I believe, with the increased awareness and the maturity of our market, this is happening now. The new Ford Fiesta is a good example.

Unfortunately, when Honda and Toyota demanded a premium for their cars in India, the buyers have paid that premium without complaining. As a manufacturer, if you are able to sell all your stock at a higher price, would you even consider reducing the price?

I believe, the buyers are equally responsible for inflated prices. Finally it boils down to demand and supply. If you can manage enough demand by positioning yourself and convincing the market that you are "premium" brand, you can take the buyers for a ride. The other way around is what Toyota has managed to do with the Fortuner. Don't you think, given the trend and the HUGE waiting period, they should ramp up the production? But they chose not to and thereby created a supply-constraint which makes the product even more attractive/compelling/exclusive, and then they can price it in the 20L+ range.

Last edited by SDP : 19th December 2011 at 12:54.
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Old 19th December 2011, 14:48   #38
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Default Re: The downside of price cuts (for an existing owner)

This is a good point. My Yeti spec conforms to the "Experience" Model in UK/ Europe, but is sold as the "Elegance" model here in India.


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We pay much higher price for cars in India, in-spite of them being stripped down versions of the same models sold overseas.
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Old 21st December 2011, 17:17   #39
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Default Re: The downside of price cuts (for an existing owner)

IMHO, a smart buyer knows his or her way around before or after a price cut. I'm pretty certain one could negotiate as much amount of a price cut as discount even before companies slash prices. Discounts for slow moving C segment sedans going a few shades above 100,000 are not secrets anymore.
For example my neighbour purchased his Honda City for a massive 1.4L discount a few months (and not days) before the price cut.
Hence, price cuts keeping all other factors constant are only to the benefit of lesser informed buyers who haven't done necessary research while making a capital asset acquisition.
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