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Old 19th July 2017, 10:08   #1
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Default Why is the diesel : petrol price difference not uniform across variants?

Look at the upper two price lists , all ex showroom Delhi, do you see an abnormal difference.The amaze petrol is a 1.2 litre manual and the diesel has a 1.5 litre mill that obviously costs more.But the thing that really confuses me is the fact that in the base two models, the difference is uniform at around Rs.1,15,000, as we go up the variant range it increases non uniformly.In the S model it is close to ₹1,60,000

Considering the fact that the spec sheets in terms of equipment remains the same apart from the fact that all diesel cars come with ABS as standard, so in the petrol models, due to addition of ABS we should rather have a lesser price difference, which is clearly not the case.

I have also attached the price list of the Honda City too, whereby it houses petrols and diesels of 1.5 litre each.Again the price difference is non uniform ranging from 1.19 lakhs to 1.45 lakhs.

Now, the City diesel has the same engine as the amaze apart from the 6 speed gearbox, so my question is that is the 6 speed gearbox setup so expensive or is the 1.5 i vtec so cheap to produce that the price difference between both engine variants is greater than that for the Amaze.

Also adding to my point is the fact that the city has no differentiating features between the petrol and diesel?
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Old 19th July 2017, 11:20   #2
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Default re: Why is the diesel : petrol price difference not uniform across variants?

Price of cars has got nothing to do with either the equipment list or the difficulty to produce/manufacture. Price is proportional to the demand and supply and how much is the customer willing to pay for in a specific country/geography.
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Old 19th July 2017, 12:19   #3
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Default re: Why is the diesel : petrol price difference not uniform across variants?

Quote:
Originally Posted by dhruvritzed View Post
But the thing that really confuses me is the fact that in the base two models, the difference is uniform at around Rs.1,15,000, as we go up the variant range it increases non uniformly.In the S model it is close to ₹1,60,000
Probably due to the fact that the Amaze base variant is popular with the cab guys and has to compete on price with the entry level cab variants of other manufacturers (Like DZire Tour, Xcent Prime etc)

Quote:
Originally Posted by dhruvritzed View Post
Now, the City diesel has the same engine as the amaze apart from the 6 speed gearbox, so my question is that is the 6 speed gearbox setup so expensive or is the 1.5 i vtec so cheap to produce that the price difference between both engine variants is greater than that for the Amaze.
Pricing of any car in the market is decided only by the demand, not by the manufacturing costs. The company prices their cars to bring maximum profits, and that figure is always a compromise between the number of cars they intend to sell, and the profit margin per car.

Cars like the City sell a lot more of their higher variants, and the entry variants are priced only to bring more footfalls to the showroom, by way of shock pricing.
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Old 19th July 2017, 13:58   #4
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Default re: Why is the diesel : petrol price difference not uniform across variants?

To Add to what others have said. This type of pricing strategy is called loss leaders. Commonly used in grocery stores on everyday products like milk and eggs, to get you in and entice you with their other more expensive items. Loss leader originally meant pricing was below cost, which is now mostly illegal, so its usually at cost.

This is typical Honda worldwide, They never want to sell as many cars as they can (Unlike toyota, VW and suzuki). They always put in production capacities conservatively compared to known demand, And keep it at that balance of production vs demand to maintain the cream on their bottom line usually around 5%.

This in conjunction with their Historical Reliability, refusal to sell to fleets (Taxis, rental) and solid ASS, assures organic growth without taking many risks. Also keeps them in a position of rarely having promotions or price reductions.

Honda has had a horrid time this past decade worldwide, Mostly due to their own cost cutting ways (Owned a 2003 Honda Pilot and 2010 Pilot, Night and day difference). Even worse in India, Mostly due to their ignorance in producing small non Kei Cars. But you also have to remember they have had to deal with major blows, from the economic downturn, tsunami to the Takata fiasco and many smaller problems. They seem to be getting their groove back on a global level.

We used to be a Honda family, 3 Pilots, 2 Accords, 2 Civics and a Crv later and we refuse to buy anything on offer from Honda in India. I hope Honda India can come bk to glory aswell.

Interestingly I once learnt that Toyota has a reverse pricing model. Where they Design the car, then they come up with a figure they think the customer will pay. Then they go to the suppliers and tell them what they are prepared to pay for each part.
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Old 20th July 2017, 10:47   #5
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Default Re: Why is the diesel : petrol price difference not uniform across variants?

Completely agreed with BHPians above. And it's not just Honda or diesel : petrol variants. You'll see the same variance across manufacturers, even for asking premiums for 4x4s, Automatics etc. IIRC, one Ford Endeavour variant recently had an AT for merely 30,000 rupees or so over the MT.

Cost has nothing to do with these calculations .
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Old 20th July 2017, 10:58   #6
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Default Re: Why is the diesel : petrol price difference not uniform across variants?

To someone unaware who walks into the showroom, this pricing strategy is really confusing.As a counter-maruti, the king of the hill definitely recognizes this fact and prices diesels, AMT's at almost the same difference across models, 2000-3000 rupees notwithstanding.
The new Dzire has exactly a ₹47000 difference between Manuals and AMT's
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