[Accent Martin]

Originally Posted by RoadFiend

This thread is interesting to me: My Fortuner AT is 3 yr old now and I need to sell it and go for a new lease. Instead of Fortuner AT again, I've been toying with the idea of a Q3 or X1, don't know why...

This is because as per Maslow's Need hierarchy theory, you are slowly transitioning into the slab of 'Esteem needs' of an individual. Good for you. Enjoy this phase and accomplish your passion.

[srgntpepper]

Maybe, instead of overpriced, we should say highly profitable pricing.

All of Volvos offerings are CBU, yet priced comparably or lower than the equivalent CKD offerings of the German Trio, despite paying the heavier attendant duties. Which means the Germans must be enjoying very juicy bottom lines, and it isn't as though their hands are being forced by Indian laws or inflation.

[GKR9900]

Originally Posted by Jeroen

I just fail to understand what is wrong with that. You mean people can't appreciate a car if they don't care or understand the specs?
I don't think its appropriate to call their buying criteria poor, or mine better for that matter, its just different.
Jeroen

I don't know if it's my poor literary skills or a misunderstanding, but that's not what I meant. Read the full post and you'll get what I was hinting at. In no way am I derogating the buying criteria of other people. It doesn't make my criteria better or worse than theirs. Like you said, the criteria is just different. What I was implying here is that the manufacturers are actually taking advantage of the consumers' apparent lack of understanding of what they're actually buying. When you combine that with the following quotes, I can't help but feel fishy about the way the German pricing goes.

Originally Posted by Jeroen

Not sure why we are comparing Indian prices to the USA.

Again, spec to spec, a made in USA 3 series is still cheaper than a made in India 3 series. This after accounting for the cheap labor and material costs that a country like India offers. I can't really see a reason for this difference. Would be extremely grateful if someone can educate me on what I'm missing.

Originally Posted by srgntpepper

All of Volvos offerings are CBU, yet priced comparably or lower than the equivalent CKD offerings of the German Trio, despite paying the heavier attendant duties. Which means the Germans must be enjoying very juicy bottom lines, and it isn't as though their hands are being forced by Indian laws or inflation.

Precisely my point. If the inflated prices are solely because of the outrageous tax structure, how are Volvos able to price cars the way they do?

Originally Posted by Accent Martin

Affordability is relative to one's wealth and willingness to spend on a car. At current situation, I feel the german trio doesn't hold the value for money proposition; instead they hold only aspiration value. Cars like Cruze and Elantra denote VFM. But on the other side, If I were Super rich, I would have concluded the german trio to be immensely Value for money cars rather than going in for the Rolls Royce or Bentley which at that state would have carried the image of aspirational cars. Then for sure, I wouldn't even have looked at Cruze or Elantra.

Brilliant point you've made there sir. It's all relative. Keeping inflation apart, the way I see it, the average Indian's income has been rising steadily over the past few years. People are ascending rapidly up the economic tree. Now the Germans aren't really about VFM. They're about aspirations, success and brand image. If they keep on pricing their products at more or less the same levels, sooner or later many middle class people will be able to afford one. That kind of beats the point of an aspirational halo brand, and potential high profile customers are not going to be impressed with the fact that the car in their garage is the same as that in their financially less endowed neighbour's garage. Taking example from our small state Kerala, about 5 years back, the car of choice for the super rich was an S class. A brilliant piece of machinery for those who have secured top spot in life, right? And what's wrong with the W222 S class? It's even better. Like you said, if I had that much money, it would be bang on VFM. But people have moved on to RRs and Bentleys. Of the many highway trips I take, very few have passed without spotting a RR Ghost. If we compare an S Class and a Ghost, the Merc even trumps the RR in certain areas. But which one would you prefer to be seen in? That unquantifiable feeling that we crave for is what sets the cash registers running at these manufacturers' offices.

[Saarth]

Getting back to price hikes, I just heard yesterday from a senior official at my Mercedes Dealer that prices are expected to rise again sometime mid-September across India, as the notices have already been passed out to dealers.

[Jeroen]

Originally Posted by GKR9900

What I was implying here is that the manufacturers are actually taking advantage of the consumers' apparent lack of understanding of what they're actually buying. When you combine that with the following quotes, I can't help but feel fishy about the way the German pricing goes.

Again, spec to spec, a made in USA 3 series is still cheaper than a made in India 3 series. This after accounting for the cheap labor and material costs that a country like India offers. I can't really see a reason for this difference. Would be extremely grateful if someone can educate me on what I'm missing.
.

What lack of understanding? What's fishy? They can price their cars any which way they want. Its their decision/pricing strategy and your free choice to buy or not.

My wife buys cars and she hasn't got a clue as far as I'm concerned. She understands what she likes and doesn't.

Would you be more inclined to buy a German car if it was sold in the USA at the same (high) price as in India?

I get this impression that some members are turned off because they believe these Germans are making a big profit here in India. Again, who am I to judge anybody else's criteria.

Just, if you follow that logic do avoid buying an iPhone, or any Apple product for that matter. Don't use Google as your search engine, because they are making a ton of money. At which point in time, or better at what level of profit, will you stop using Facebook?

I really couldn't care less how much money a company make, I just judge their price against other criteria. There might be the odd case I would think twice of buying from a company that is showing poor financial results. What about warrantee, parts etc. Happened to us once. The only car we ever bought new privately, was a Talbot Samba, my wife's car and my wife' choice. Hopeless, endless problems and about a year after we bought it the dealer relinquished his Talbot dealership and a few months after that Talbot went belly up. Leaving us with a car, under warranty, that couldn't be fixed.

Jeroen

[thatsdileep]

When these German cars were being imported into India for sale, they used to be extremely expensive...more than double what they were sold in USA due to the excise/customs duties. I expected this price difference to close in with localisation...if not equal to that of USA prices atlas 1.5 times. But still that price difference ratio is being maintained even after heavy localisation almost all the German cars are being made in India these days. Does this indicate that Manufacturers are making better margins with localisation than sharing the benefit with the customers?

[Jeroen]

Originally Posted by thatsdileep

Does this indicate that Manufacturers are making better margins with localisation than sharing the benefit with the customers?

If that is true, and in all honesty I don't know, why would they do so? They would only do so maybe if they increase the total volume or if it makes sense from an overall strategic point of view. e.g. expanding footprint/market share versus margin for a while.

All companies I have ever worked for like to maximise profits. Which in its simples form means you try and lower the total cost as much as you can and try and get the highest price you can as well! The latter is usually dictated by the (local) market, competition, brand etc, but has rarely to do with cost. My bonus, for a substantial part, depends on total revenue and total margin. So I work on both. And yes, we have local manufacturing.

Although, see my earlier post, I get the impression that for some esteemed members, the (apparent) amount of margin seems to be relevant in their perception of the value for money.

Jeroen

[thatsdileep]

Originally Posted by Jeroen

Although, see my earlier post, I get the impression that for some esteemed members, the (apparent) amount of margin seems to be relevant in their perception of the value for money.

Jeroen

I agree with you and believe that they are cashing in on customer's perception of value of money and want to maintain the tag line of luxury cars.

[GKR9900]

Originally Posted by Jeroen

What lack of understanding?

Let me answer that with what another fellow bhpian had to say...

Originally Posted by srgntpepper

I can vouch for the lousy pricing of the A3. Test drove it with my cousin last week. The entry level car, about 28-30 OTR, doesn't have projector lamps, rear ac vent, no paddle shifters, and fabric upholstery. The MMI screen is bright and contrasty, but the resolution is grainy, a INR 10000 cell phone has better readability. Of course there is no navigation. Doesnt have rain sensing wipers, which were standard on my 2010 laura TSI ambiente.

I told my cousin to TD a jetta or an octavia, which will offer most of these missing features for an equivalent or lower price. But he will go for the A3, because it is important for this corporate image.

Now the lack of understanding doesn't imply that the prospective buyers are imbeciles. It just points to the fact that some of them don't really know about the underpinnings of a luxury product they are about to buy, or they just don't care as it is well within their affordability range. Either way, the customer and manufacturer are happy buying and selling the product respectively at that price.

Originally Posted by Jeroen

What's fishy? They can price their cars any which way they want. Its their decision/pricing strategy and your free choice to buy or not.

Of course! I assure you I have nothing to do with pricing strategies of cars here. And I almost forgot about my free choice Thanks for reminding me.

It's their product and they can price it any which way they want. But that doesn't mean we can't have a healthy discussion scrutinizing various aspects. Now getting back to the fishy part, these are the instances that prompted me to make that comment.

Originally Posted by GKR9900

Few instances I can recall,

• A price difference of 1L between a CBU and CKD C Class.
• A price difference of 1L between a CKD and totally manufactured in India 3 series.
• A CKD 1 series and A Class priced 2-3 L above a CBU V40.

So how is it that BMW after all their adverts showcasing the Make in India strategy, managed to shave off just Rs. 1 Lac from the 3'er price? That's where the comparison with US prices arise. Forget being lower, shouldn't it be at least on par when it is manufactured here?

Originally Posted by Jeroen

Would you be more inclined to buy a German car if it was sold in the USA at the same (high) price as in India?

If the model in question is manufactured both in the US and India and still the asking price is same(high), I could at least draw a logical conclusion of deciding to buy one.

And then onto Volvo. AFAIK they can manage to price well equipped CBU products at lower prices than CKD German offerings. Is the company absorbing some of the costs involved so that they can price their products lucratively? For a company that still isn't in the forefront of the automotive graph in this country, wouldn't that be suicidal?

Originally Posted by Jeroen

I get this impression that some members are turned off because they believe these Germans are making a big profit here in India. Again, who am I to judge anybody else's criteria.
Jeroen

Again, I'm not pointing fingers at anyone here. I just want to understand how the pricing scenario in this case works. And there's nothing wrong with reaping big profits for a competitive product. After all, it's just business. What I do want to know is whether the price hike is the result of some corporate decision to increase the profits, or are there other factors involved.

[Jeroen]

Originally Posted by GKR9900

What I do want to know is whether the price hike is the result of some corporate decision to increase the profits, or are there other factors involved.

If you know the answer would it influence your value for money for that particular car/brand. I.e. is is part of your buying criteria?

Would it be more/better value for money if they were selling the car at a loss?



Jeroen

[lurker]

Only a drop in sales, or lesser number of suckers generated per year (excuse me this but this is exactly how German trio see their customers). Their volumes are also kept knowingly low so that they can operate on higher profits with lower volumes at lower risk. Needlessly, for some reason they are operating at a small footprint, probably to pack bags and run or something at slightest provocation.

Indians premium customers are forced their hand because whenever they need to upgrade from their Korean/Jap bread & butter cars are forced into the hands of this opportunistic trio waiting to make a quick buck. There is no earthly reason why Indian cars shouldn't be priced 'lower' than the US cars except for their own choice of lower volumes and thus compromising on economies of scale.

India is still a class-based, caste-based and in many cases a semi-feudal society where there are sharp distinctions between rich & poor and climbing up the social ladder may be equated to driving the latest German car, and those who need to show that they too are part of the upper crust have no option but to confirm to some imaginary code of that class which they wish to belong. The Germans make great cars, but I also feel they have no business getting into our social milieu in this fashion.

Kindly check what German newspapers and Angela Merkel think/speak about India, check out any German news channel like DW or German rag and they think India is a filthy third-world poverty stricken urban litter. Check out how the German professor in some berlin/Leipzig university thinks about 'Indian men' (she thinks they all are rapists and decided not to enroll Indian male students in her class).Then why the hell should we be so accomodating about them, high time the competition commission cracks down on them. Granted though, that they make great cars.

[nik hill]

Originally Posted by lurker

Only a drop in sales, or lesser number of suckers generated per year (excuse me this but this is exactly how German trio see their customers). Their volumes are also kept knowingly low so that they can operate on higher profits with lower volumes at lower risk. Needlessly, for some reason they are operating at a small footprint, probably to pack bags and run or something at slightest provocation.

Indians premium customers are forced their hand because whenever they need to upgrade from their Korean/Jap bread & butter cars are forced into the hands of this opportunistic trio waiting to make a quick buck. There is no earthly reason why Indian cars shouldn't be priced 'lower' than the US cars except for their own choice of lower volumes and thus compromising on economies of scale.

India is still a class-based, caste-based and in many cases a semi-feudal society where there are sharp distinctions between rich & poor and climbing up the social ladder may be equated to driving the latest German car, and those who need to show that they too are part of the upper crust have no option but to confirm to some imaginary code of that class which they wish to belong. The Germans make great cars, but I also feel they have no business getting into our social milieu in this fashion.

Kindly check what German newspapers and Angela Merkel think/speak about India, check out any German news channel like DW or German rag and they think India is a filthy third-world poverty stricken urban litter. Check out how the German professor in some berlin/Leipzig university thinks about 'Indian men' (she thinks they all are rapists and decided not to enroll Indian male students in her class).Then why the hell should we be so accomodating about them, high time the competition commission cracks down on them. Granted though, that they make great cars.

Your comments are too extreme in my opinion.
I have had a few German friends and obviously all Germans don't think alike as all Indians don't think alike.
If some of them think it is an urban litter they are not very far from truth. I was stuck in Delhi traffic last evening for closer to three hours to travel a distance which should have taken 30 min at max.
Coming back to topic under discussion companies can't be blamed for providing products that people aspire for at the price points they are willing to pay.

[sandeepmdas]

Originally Posted by lurker

Only a drop in sales, or lesser number of suckers generated per year (excuse me this but this is exactly how German trio see their customers).

What do you think about LR/RR and Jaguar then?

[prakhar1998]

Originally Posted by GKR9900

What I was implying here is that the manufacturers are actually taking advantage of the consumers' apparent lack of understanding of what they're actually buying.
Again, spec to spec, a made in USA 3 series is still cheaper than a made in India 3 series. This after accounting for the cheap labor and material costs that a country like India offers. I can't really see a reason for this difference. Would be extremely grateful if someone can educate me on what I'm missing.
.

Are you suggesting that people buying these expensive luxury cars are naïve enough to spend their hard earned money on a product they don't have knowledge about? People are fairly well aware of what they are stepping into. A car enthusiast or not, everybody today has various resources such as the internet to their disposal and are well informed of their choices.

Could you please clarify as to how companies are taking advantage of customers?

Lets get one thing clear, no one is getting tricked or fooled. The customer buys the product not with a gun to his head.

Now coming to your price part. India has a 30% duty when it comes to CKD automobiles as opposed to a 2.5% duty companies like BMW have to pay to import their vehicles into USA. The 3 series isn't manufactured in USA.
If you even compare other commodities with India, USA comes out cheaper in many. This does not mean that the company is cheating. Everything works in relation to demand and supply. Manufacturers are profit maximising agents, and function by judging the market trends and demands.

They don't, and can't rip off customers unless they are a monopoly or are illegally colluding. Considering how big the rivalry between the three Germans is, I highly doubt they have conspired together to rip the Indian customer.

And no, if we stop buying their cars, their prices won't suddenly fall.

[Turbanator]

Only a drop in sales, or lesser number of suckers generated per year (excuse me this but this is exactly how German trio see their customers).

Indians premium customers are forced their hand because whenever they need to upgrade from their Korean/Jap bread & butter cars are forced into the hands of this opportunistic trio waiting to make a quick buck. There is no earthly reason why Indian cars shouldn't be priced 'lower' than the US cars except for their own choice of lower volumes and thus compromising on economies of scale

Why are you after German companies only or their customers/ suckers ? Will you do a quick search of prices of Japanese / Korean Companies in USA & India . I am more than sure Toyota does not sell Camry anywhere on planet at over 45000 US$ or Corolla at 30000 US$ or LC Prado at over 135 Thousand $ that too with a punny 4 cylinder engine , same with Hyundai - SantaFe at 45000 US $ , even the smaller Creta is sold here at 25,000 US $

On contrary I will actually support & applaud German companies for not only pricing their products quite competitively but also launch updated and quite decent loaded models . Do factor Custom Duties , Excise & Sales tax here which all added can be as high as 75 % even on Indian assembled cars having major Import components ( about 30 % Duties on CKD , 30 % Excise , 12 % VAT ) .

Customs on SKD is even higher which has prompted BMW & Mercedes to start assembly of engines locally . We can see lower prices in India only when localization levels are improved , since German companies are not listed we wont have access to their balance sheets probably but I can confidently say all of these must be in deep losses - new plants , low sales , high overheads . Unfortunately there is no shortcut to solving their problems , I believe this will get better as market matures.