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Old 19th August 2015, 00:32   #46
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

Err. it is already pretty "liberalised", the major difference being that the entry barrier into car manufacturing isn't as easy as a cell phone manufacturer using a third party like Foxconn? also we have always had the micromax & xiaomi of cars in our country, Maruti which sells on features at a lower price at the cost of quality build and safety

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Originally Posted by fighterace View Post
Well, I think it is high time that the car markets in this country is liberalised. Remember what Xiaomi did to the mobile handset market? Something along those lines need to be done for the automotive sector.

Last edited by Bhodrolok : 19th August 2015 at 00:44.
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Old 19th August 2015, 00:59   #47
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Originally Posted by fighterace View Post
Well, I think it is high time that the car markets in this country is liberalised. Remember what Xiaomi did to the mobile handset market? Something along those lines need to be done for the automotive sector.
Yes our market does need a fresh outlook, but not the Xiaomi way, with attractive looking products on paper, often with questionable quality, horrible service, and ugly user experience (miui),
but rather the Apple way.

There should be this one standard top selling brand across segments that offers high quality, high standard, and well optimised cars to satisfy the users, with safety and quality as a priority and no corners cut. And yeah, genuine cars. Not one type of car in disguise of another. What you see should be what you get, even though it may be priced slightly higher than average.

And most importantly, this brand should capture the hearts of the common public, who don't understand the geeky stuff. They should aspire to own the genuine world class cars at any cost, and those who own them should feel proud about them and show them off to those who don't, which in turn would make the others want to own them even more.

In fact, this pride-aspiration way is the only way high quality world class cars can sell in our country, and the quality standards of the market improve. In any other case, they will feel overpriced and low VFM compared to Indianised cars having some creature comforts and design accessories instead of better safety kit for the same money.

Not that Apple phones are very great, they're just too locked down and boring, and need to much money for everything, but ultimately, they just work. Almost every single time.
And I'm sure this strategy would work like a charm in the automotive industry.

But as of now, there aren't too many contenders for this role. There is Volkswagen, or Toyota, who have quality, engineering and brand value, but I don't see them getting to the top so soon. Others are Honda, Hyundai, maybe even Ford or Renault, or best - the German luxury trio, if they do decide to move a couple of segments further down the rungs, in our market.

Now to find our own version of Steve Jobs...

Last edited by mukul32 : 19th August 2015 at 01:05.
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Old 19th August 2015, 01:09   #48
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

When I booked my Honda City near the end of 2010, there was no Brio or Amaze to think about. Looking back, I actually appreciate the lack of these "options". While manufacturers have introduced more of these cars in the sub 4m and other categories for the Indian market, they have simply pushed up what was on offer four or five years ago out of reach for a customer looking in a particular segment in the name of "product differentiation". They have hidden behind jargon like "product positioning" while not really improving on their offerings to bump them up a segment.

The compact SUV while being revolutionary makes one think just how a manufacturer can get away while offering so little for a price north of 10L. The same can be said for the MUV/MPV.

Folks who cite inflation must note that it does not really cost a manufacturer a lot more to mass produce say a D segment sedan than a B segment hatchback. Manufacturers, dealers and insurance providers all make their money in the premium B and C segments for the most part and also in the D segment.

On the other hand, there has never been a better time to look at the pre-owned cars market. A simple search on carwale.com and such websites yields numerous options to suit every budget at least in a city like Bangalore(I did not check for other cities. I imagine it may be a little more difficult in tier 2/3 cities).

One would definitely derive more value in going for certain successful pre-owned models. Japanese cars that are not too old for eg: The City, Civic and the Corolla Altis are going for mouth watering rates. These cars are damn reliable and relatively less expensive to service and maintain than their european counterparts.

Imagine owning a low run Civic or an Altis for 7 or 8L. Even the koreans and europeans can be had for much less and the buyer has more room to negotiate especially in the case of models from Ford and Chevrolet. One can never get the combination of space, refinement, interiors, features, AT option and build quality in new cars from a lower segment.

Also, if you really look at how much of your money is going to the government by way of taxation and also for insurance in addition to manufacturer cost, one can't help but get the feeling of being robbed when purchasing a new premium hatchback or a C/D segment car. Pre-owned cars are looking better and better south of 10L these days.

Last edited by sydras : 19th August 2015 at 01:11.
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Old 19th August 2015, 05:55   #49
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

I worked in one of the big fours, on my first day, one of the Directors said this during the boot-camp: "For any company, bottomline matters the most. What customers feel or want is the least of their worries. Its profits baby !"

If people are ready to shell out more money for less value, what should stop the manufacturers from increasing the price ? Add to that a public transport system that is perhaps the worst in the world with no better alternatives in near future, it creates a scenario when public transport buses/taxis are on strike and the auto-rickshaws charge you an amount which would equal the rates of an AC cab !
Why do you think they charge that much ? and what do you do ? You take that auto, because you HAVE that money (the autowallah knows this as well) and you want to reach your destination, even when you know you are eating dirt and breathing dust all the while. The ones who cannot afford are left in the lurch. The Indian car scene is pretty much the same.
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Old 19th August 2015, 08:35   #50
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

Increasing incomes and purchasing power has made customers ready to buy stuff at huge prices. Interestingly, The increasing incomes has also meant higher manufacturing and wage costs.

We are earning more, paying more, for the same set of facilities / convenience.

If you think about % Car Price / Income earned for the first time car buyer across the years that should put across the right comparison. However, as any industry matures and volumes increase, benefits of automation and cheaper tech need to keep prices under check. Eg: Mobile Phones, in 2001 a simple monochrome nokia phone used to cost Rs 10K.. Now we have much more advanced phones at the same price while the monochrome retails for Rs 1K.

This needs to happen in the car industry as well.

Also buying used cars for now doesn't solve the problem as a few years down the line you are looking at the same overpriced inventory from now.
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Old 19th August 2015, 10:53   #51
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

Pricing is a function of demand as per economists. If there is demand for something, the provider will try to maximize profit by increasing prices till the point it does not lead to significant decline in demand.
I agree that prices have increased in the last 3-4 years but this has been the case across the board for all the items due to higher inflation in the economy. However, there is still demand even at that price - just look at the sales numbers of fortuner. This is the normal course of economic activity and we can just grin and bear it.
This sub4 meter category has been created specifically to meet a certain demand - for a sedan equivalent car which has all the bells and whistles of a higher segment and can absorb luggage as well.
I doubt if we will go back to the previous segments of C1,C2,D with clearly defined price points and a bunch of cars in each of the segments.
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Old 19th August 2015, 11:26   #52
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

On a related note, I want to ask, how much % of your annual Salary are you willing to put in to purchase a car?
The answer to this question will explain how and why the prices increase constantly.
The bigger your car price (compared to your current wages), the more the EMI you would pay.
Getting on EMI means you have already spent on your future earnings, and now you are paying interest for the same, indirectly contributing to the inflation.
Think about it. If your capacity is that you can buy a car of Rs. 10 lakh, with your own savings in 2020, but choose to buy the car now in 2015 using a car loan, you would end up paying around 3 lakh interest to bank, right? This additional 3 lakh you would be paying as interest to bank, contributes to the inflation of the product in various ways.
So, if you are saving up 10 lakhs until 2020 (without going for EMI in 2015), you would end up buying an inferior product at 10 lakhs, or put additional 3 lakhs and buy the same product at 13 lakhs.
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Old 19th August 2015, 11:47   #53
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

Milking the consumer has been taken to a new level. Who on earth would have thought of wannabe SUVs costing to the tune of >17L?

I have been thinking about this for quite a while, but in recent years, especially last decade, the mass market players have taken the pricing to the premium segment already. I mean, Out of Top 3 global brands, where are Toyota and VW's sane pricing and mass market cars in Indian market? If they are premium in Indian market, then where are the cars for the masses?

Should we satisfy ourselves with Altos, 800s, cheap Chinese rebadges et al?

Thus, cars are indeed a premium product in our country. No complaints. Only wish them to be cheaper.

Just when I think of the way Toyota is milking with it's Innova and Fortuner, I go crazy. So is Hyundai with Creta and Skoda with Octy.

Tata seems to be reasonable but not accepted by the market.

May be I'm too penny wise or poor to be in the market for cars :P

Last edited by GTO : 3rd October 2015 at 16:40. Reason: Language
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Old 19th August 2015, 11:49   #54
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

I agree that the prices are increasing, but see the fine print. The equipment ,comfort,safety levels along with the quality has gone up. The features that were available in the D segment and above have trickled down to the lower segments. The market is maturing and vehicle size no longer matters. It's not about how "big" the car is but how well it suits your requirements.

Since our county's road infrastructure is (sadly) not keeping up with the rise in the number of road users, better technology in a smaller packet is what the market demands, thus giving rise to the "compact" Sedan/SUV/MUV segment. When manufacturers offer such packages, people will buy. Just look at the Creta.

For those tearing down Maruti for offering a smaller Dzire at a higher price, do remember that the quality and equipment levels are up and the engine is superior in efficiency and technology. Same goes for Honda City/VW Jetta.

I agree that the hike in some cases is unjustified, but the phenomenon is here to stay.

Last edited by govindremesh : 19th August 2015 at 11:51.
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Old 19th August 2015, 11:53   #55
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

There are two major factors that are applicable here, both of them are two sides of the same coin

1) Inflation that affects almost everything
2) Time value of money

in 2007 I purchased i10 Magna for 4.7 laks Bangalore on road price. (still have it)
Time value of this money today is --> 9.36 Laks, (4.7 * 1.09 ^8) (standard interest rates considered)

What do i get at 9.36laks today --> a fully loaded i20 petrol, so

has the segment changed ? or the buying power changed ? value of the "Rupee" changed?

I think, people are getting more bang for the SAME buck today than they were getting few years back.
note: money yesterday is not the SAME money today.

Last edited by groom : 19th August 2015 at 11:56. Reason: added Value :-)
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Old 19th August 2015, 15:36   #56
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

The flip-side of the coin would be better value for well maintained Used cars and more buyers. Haven't we all always wanted a better used car market.

Considering that the new car costs a lot, people like me who dread at the thought of buying a used car, would be made to think about the used car option.
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Old 19th August 2015, 16:10   #57
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

Times have changed
If you want to be consistent with time and avoid all effects of NPV of your money, pre-worshiped is the only option. Upgrade to a segment or two higher with same buck.
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Old 19th August 2015, 16:41   #58
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I agree there has been a paradigm shift for the worse. When I got my fiat linea emotion pack top end petrol model in 2009 I paid 7.87 lakhs for it.
Now when I finally sold it and went to the market for top end automatic petrol Honda city it costs a whopping 14 lakhs in chennai. That's a 100% increase.
No wonder I see such a thread in teambhp. Cars are no more realistically priced. Take for example the SCross and Creta pricing fiasco. But still people buy it despite its cost.
My salary has not got a hike even by 50% since 2009. That's the plight of Indian public.
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Old 19th August 2015, 17:01   #59
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Default Re: A segment shift in the Indian car scene - So many cars now priced a level above!

Quote:
Originally Posted by groom View Post
money yesterday is not the SAME money today.
Well Said!
This is a complete different point of view supported with facts, in an otherwise ranting thread about how the economy / manufacturers are exploiting poor us!
Suppose you work with an automobile manufacturer. You would expect raises each year, right? Why would you expect a salary raise, when the work you did last year is the same as the work you do this year?
To pay more money to you as salary, the company has to earn more than the previous year, right?
How does that happen? By increasing product prices, obviously.
But then, our manufacturers are at least adding more value to it by doing a lot of R&D, and adding safety, comfort features.
Would you accept the Maruti 800 model sold in 1990s for the price of current Alto? Or how about the First Gen Honda City at current price?
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Old 19th August 2015, 18:12   #60
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Originally Posted by geeash View Post
I agree there has been a paradigm shift for the worse. When I got my fiat linea emotion pack top end petrol model in 2009 I paid 7.87 lakhs for it.
Now when I finally sold it and went to the market for top end automatic petrol Honda city it costs a whopping 14 lakhs in chennai. That's a 100% increase.

Please don't take this personally, but you are not being very logical here. A Linea was never a direct competitor to the City, and comparing a manual with an automatic does not make sense either.

An automatic petrol Honda City (2nd Gen) was almost Rs. 10 lakhs in 2004 - without the iVTEC engine. In fact, car prices have risen considerably slower than general inflation, despite most state governments raising registration charges very substantially (in MH, corporate registration has gone up from 7% to 20% in this period), which is why most car manufacturers do not make money in India.
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