Article : Give me something I can actually buy!

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Saturday, September 16, 2006
All right, so give me something I can actually buy!

For a car enthusiast and constant traveler, the one thing that hurts me most about India is the sheer lack of variety in the cars that are available for purchase. Add to that the exorbitant prices that most cars are at, especially when compared to the prices the same models command in other countries, and you begin to really feel you've got a bad bargain.

Let's take the Honda Accord for instance. In India, a standard Accord is priced somewhere in the Rs.16-17 lakhs range, approx USD 40,000. If you add in all the options, and road tax and insurance, you end up at a bit under USD 50,000. And suddenly you feel (quite rightly) that you've bought yourself a high-end car. Globally though, the Accord is a mid-range car usually priced at USD 20,000 to USD 25,000. Or the Mitsubishi Lancer, which in India is again somewhere at the upper end of the mid-range cars along with the Corolla - USD 20,000 I think. We were recently looking at a car for our Middle East office, and a brand new Lancer comes in at approx USD 12,000 - that's about Rs. 6 lakhs - almost half what it would cost in India. The same goes for other run-of-the-mill models such as the Skoda Octavia or the Ford Mondeo, which are considered status symbols in India. For God's sake, all the taxis in Dubai are Camry's!

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[GTO]

Firstly, I'd disagree with the authors note on lack of choice. We have almost each car maker either selling their cars, or in the process of. Sure we dont have the Mazdas and Peugeots but for a closely protected annual market of 1 million odd cars a year...we have a good range. For e.g. you cant compare the choice available to the American market which is almost 17 times bigger than ours.

Also, the author should remember that Peugeot had a chance (a golden opportunity as one of the first players). But they goofed it up by the wrong car, the wrong partnership and siphoning off customers deposits.

If you add in all the options, and road tax and insurance, you end up at a bit under USD 50,000.

Absolute rubbish. USD 50000 is 23.50 lacs whereas we all know that a fully loaded I4 manual accord costs under 17 lacs. In the States, a well-equipped Honda Accord would set you back by about @22,000 (10 lacs odd). So we do not pay double but 60% more. That is inevitable considering the limited size of our market (2000 p.a. versus 4,00,000 Accords for the States) and the taxation structure.

I think its become a habit for these so-called renowned writers to bash the Indian automotive industry. Too bad for them, cos I am sure as hell very happy!

[lurker]

Is the Accord imported into India as CBU or SKD or even CKD ?

[lurker]

Most of the high prices that we face are basically due to our tax-system and a govt that considers most full-size cars as luxury products. Secondly whenever an 'import' quotient comes into the picture the 'articially tabulated' dollar rate comes into play.

Importing parts in dollars is a losing proportion for the Indian consumer because he has to then factor in an artificially inflated currency and that reduces his purchasing power.

Americans can afford to buy maximum numbers of cars in the world because their currency is kept as global currency due to factors of economic and military coercian and they purchasing power is hugely inflated due to the nature of their currency which is taken as globally accepted currency.

If at the same time the Indian currency was accepted as global currency then we would be buying 3 times the cars the americans bought.

Countries in the middle-east meanwhile take advantage of the fact that energy trade in dollars keep their dollar reserves overflowing and they can use that to splurge in whatever way they deem fit.

The European Economic Zone is the hub of all automative manufacturing and innovation and thus escape and currency shocks and enjoy common duties.

The same goes to a certain extent with the ASEAN and east asian countries.

While poor India is left with high-priced cars with limited models, with the purchasing power of people kept at a low level and every odd in the book stacked up against them.

[theMAG]

Originally Posted by lurker

Is the Accord imported into India as CBU or SKD or even CKD ?

The Accord's an SKD operation. The Camry is a CBU route.

[ess_a]

Originally Posted by lurker

Most of the high prices that we face are basically due to our............................................... .................... them.

Totally agree with you sir totally.... We really are'nt in an enviable position... add to it the fact that US per capita is more than 32,000 $ while that of india is a paltry 800$, which even after purchasing power parity comes to around 3100$.... Another reason why Accord (around 20,000$) is a mid range car in US, but a luxury car in India...

[lurker]

Earlier I used to think PPP would show up the true scenario but I realize that the Indian central back is very conservative with money supply in the economy. So probably we need parity with the dollar on the same lines as EU or GBP rate to the dollar. Upto the early 80s I used to remember that we had the rupee and the Chinese currency around 12 to the dollar. Today we are plumbing the depths @ 46 and Chinese are @ 8/1$.

Needless to say the purchasing power of the Chinese outclasses us at least as far as nation. The architect of the Rupee devaluation during the early 90s was none other than the current genius who is presiding over destiny Shri Manmohan Singhji. At that time he did it under pressure from WB/IMF who were bent upon extracting their pound of flesh from India for a bail out package. I feel infact that their intention was to screw India's growth for a couple of decades on behalf of their mentor. The mentor of WB/IMF then and now is none of other than the current day thong & bikini clad sexy superpower we also refer to as the 'YouYesYaa' !

In our country a casual day laborer in a remote village still gets around Rs. 60/day if he/she is getting daily wages. That is similar to the $10/hr JoeSixpack working at some convenience/grocery shop for 6 hrs. But the purchasing power enjoyed by JS and disjoyed by our daily wage laborer "ShyamNoPack" has a ton of difference. That is where our history of first being screwed by the British and currently by the Americans and the brown sahib/desi elite in the interregnum becomes evident.

Trust me I would enjoy cars much more if India were in a situation like Germany where even an avg DeutschJoe is able to afford a VW or a MB. In such a country I would fill up my car with mods and ICE and still be happy about it and even manage to envy other by nurturing a guilt-free conscience and show my taste and class and manage to attract a few chicks at the same time.

[esteem_lover]

Originally Posted by GTO

Firstly, I'd disagree with the authors note on lack of choice. We have almost each car maker either selling their cars, or in the process of. Sure we dont have the Mazdas and Peugeots but for a closely protected annual market of 1 million odd cars a year...we have a good range. For e.g. you cant compare the choice available to the American market which is almost 17 times bigger than ours.

Also, the author should remember that Peugeot had a chance (a golden opportunity as one of the first players). But they goofed it up by the wrong car, the wrong partnership and siphoning off customers deposits.



Absolute rubbish. USD 50000 is 23.50 lacs whereas we all know that a fully loaded I4 manual accord costs under 17 lacs. In the States, a well-equipped Honda Accord would set you back by about @22,000 (10 lacs odd). So we do not pay double but 60% more. That is inevitable considering the limited size of our market (2000 p.a. versus 4,00,000 Accords for the States) and the taxation structure.

I think its become a habit for these so-called renowned writers to bash the Indian automotive industry. Too bad for them, cos I am sure as hell very happy!

i think i totally go with GTO here. first thing that strikes me about this author is that he has no knowledge of the indian market or in manufacturing. he wants coupes instead of sedans & he wants them to be priced on equal terms with USA. If you want the prices of Indian made cars to be on par with the american market, then the volume of sales has to be on par. if it is on par, then i can safely presume that we will have cheaper cars than the US. you also have to think of the majority of people here in india. They live on budgets. Our lives are planned right from our birth. We prefer paying cash than through loans. If someone wants to equate a society like ours with the europeans or the americans or with anyone else, then he is only fooling himself.

[hondadude]

This is just another dude who seem to have just discovered that cars in India are more expensive than US. What an exciting discovery. Duh!

There are several reasons for cars to be expensive in India. Tax structure is just one part of it and is geared to induce manufacturers to source parts from local market and assemble it in India.

Lurker,

I have tried reading your posts a couple of times but still can't figure out what is the point you are trying to make. Several unrelated statements, some factually incorrect as well.

[abhibh]

Hey people dont be so harsh to this guy. May be this artcle is his PHD thesis..

[Steeroid]

How come nobody cribs that they have to pay much more for all the other essentials of life abroad than they have to in India? You can get chai for Rs.2, breakfast for Rs.20, and generally live on Rs.100 a day - how much do you need to get through a day in the US? How much do you pay for real estate / rents / mortgages there? You can get a pretty decent apartment for slightly over $100,000 here. Buy an apartment - the money saved will pay for your Honda Accord or even the 3-series (depending on the apartment you buy).

Compared to all that the extra amount you pay for cars is understandable. Win some, lose some.

Swalpa adjust maadi, saar. Thoda adjust karo. At the very least, nobody will ask you whether you're illegal here.

[Samurai]

Originally Posted by hondadude

Lurker,

I have tried reading your posts a couple of times but still can't figure out what is the point you are trying to make. Several unrelated statements, some factually incorrect as well.

I understood what he is trying to say, he is describing why americans can afford more than anyone else because of the secure status of the US dollar. But he is also mixing international finance with international politics and confusing people who don't have some finance background. Besides, this is a wrong thread discuss international finance.

The author the blog being discussed here is obviously clueless about Indian auto industry as noted by GTO and others. I am not sure why we should discuss it and increase its importance.

[GTO]

How come nobody cribs that they have to pay much more for all the other essentials of life abroad

ABSOLUTELY!! The United States is just so expensive for daily essentials. Like I said, its just become a habit for most to bash India for no reason. Sure, every place has its pros and cons but I am sick and tired of these west-obsessed types who are obviously so mis-informed and complexed.

I love India, and am extremely proud of this country.

[Godfather]

Originally Posted by Steeroid

At the very least, nobody will ask you whether you're illegal here.

Good point Steer.. "Alien" is the correct word here..

[lurker]

Originally Posted by hondadude

I have tried reading your posts a couple of times but still can't figure out what is the point you are trying to make. Several unrelated statements, some factually incorrect as well.

There are actually 2 disjointed sentences in that article, which I didn't notice while typing it out. So to a person who is not 'clued-in' to what I am writing about; such mistakes could be extremely challenging to their comprehension of that piece. Meanwhile could you do me a favor and point out the 'factual inaccuracies' that you are referring to ??

And abhibh, you have a pretty novel & 'interesting' way of asking people.

Originally Posted by esteem_lover

If you want the prices of Indian made cars to be on par with the american market, then the volume of sales has to be on par.

That's a chicken & egg situation. For high-value 'standardized products' that are available around the globe in the same format a potential customer is always going to enquire about 'cost-effectiveness' and VFM (Value For Money). If they feel that they are being fleeced by the govt in form of taxes or by the company then sales are going to be affected.

This is the age of the internet and it doesn't take a lot for the average punter to seek out the price of say a Honda Accord in say Middle East or North America and then check out if he is getting VFM here in India.

For most people, if they feel they aren't getting VFM, they back out of the deal.

That leaves out a select few buyers who will go ahead with a purchase anyway. And that is what translates into 1000/2000 car sales for some companies.