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Old 4th June 2014, 09:33   #316
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Originally Posted by Rollingwheels26 View Post
Hi all,

Disclaimer: A newbie here. I have been following Team-bhp avidly for the past 4 months and other than a couple of replies here and there this is my first thread ever ! So please feel free to correct me where i am wrong ! Now am wondering if other car manufacturers (who manufacture their cars in India and dont import them ala Ferrari, Bugatti etc) do the same -Honda, VW, Skoda am looking at you.

Am i missing something here ? Are the high prices for a reason or just to build an aspirational brand value?
It is a well known fact that Indians are willing to pay more for aspirational goods and brands that project affluence. That's why all car brands market affluence in their advertisements except maybe Maruti.

That's why everything from luxury watches, clothes, shoes, air conditioning, home decor is priced higher by 40-50%

On the other hand, the market is bigger and taxes are lower in the US. The regulators are very effective at what they do and big consumer watchdogs such as consumer reports have a big impact on the purchase decisions, consumers at much more informed .

The above factors lead to lower upfront costs and better quality and warranty.


OT: Two incidents come to mind on the importance of the 'projection of affluence' and how we 'value the sticker price more than the actual goods on merit'

My expat CEO (I worked for a while in the corporate world) told me how he was taken more seriously at the IRDA offices when he shows up in a cavalcade of two Audis with a couple of Innova cars as pilots with him ultimately leading a group of 15 people. In the UK it would have been 3-4 people including him.

If you are in a position where you need to project power and affluence (is how the world works) big cars are an important tool. And we know how important power and affluence (true or projected) are in our society to get things done. And people at willing to pay a premium for it (to stand out from the crowd) .

An astute businessman is a family friend who told me this story a couple of years ago.. He is a terrific negotiator and is well aware of the profit margins in the textile business.

When he was younger he took his wife shopping and after two hours she selected some saris one of which was more expensive at 8k rupees at the time .
So this man then proceeded to sit down with the owner and gave some references and negotiated the price down to 3.5k rupees.

As soon as his wife learned of the negotiated price, she lost all interest in the sari and refused to buy it :-)

So the next time a noob asks you about your spanking new ride, and instead of asking about the 'engine, ride or pickup', throws this question at you - - - " kitne lakh ka gaadi hai?" , don't be surprised

Last edited by mobike008 : 4th June 2014 at 15:07. Reason: changed cats to cars ;-)
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Old 4th June 2014, 10:05   #317
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Price is what a consumer is willing to pay and not what it costs to produce.
The example Dr. Singh quoted below is perfect example of velben goods in economics theory. I quoted the same in context of iPhone pricing somewhere.

Cars in Indian context are Velben goods and that is the reason Nano did not sell well , Afterall fires happen in almost every vehicle in India be it Audi Q7 or Honda City but only Nano sales get impacted by such visuals.

Quote:
Originally Posted by drsingh View Post
When he was younger he took his wife shopping and after two hours she selected some saris one of which was more expensive at 8k rupees at the time .
So this man then proceeded to sit down with the owner and gave some references and negotiated the price down to 3.5k rupees.

As soon as his wife learned of the negotiated price, she lost all interest in the sari and refused to buy it :-)

So the next time a noob asks you about your spanking new ride, and instead of asking about the 'engine, ride or pickup', throws this question at you - - - " kitne lakh ka gaadi hai?" , don't be surprised
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Old 4th June 2014, 11:23   #318
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Originally Posted by jinojohnt View Post
Aren't the Insurance and Labor (Service) expensive in the West? Does that mean the total cost of ownership remains roughly the same as that of india?
Yes they are. Service cost (labor) in Europe is very high compared to India.

In the Netherlands, at an authorised car dealer, you will likely be being charged between Euro 55 - 75 per hour (INR 4500 - 7000). Independ garages would charge a little less, but not by much.

From my own experience (car) insurance differ wildly between Countries anyway. I'm paying around Euro 300 per year for our 1998 Ford Fiesta, third party only. All my other cars are insured on classic and or young timer insurances and that makes comparison very difficult. But I'm sure it will be expensive, especially fully comprehensive insurance.

I was paying around USD2000 per year for my Jaguar XJ in the US. (fully comprehenisve) But that was partly because I was new into the USA, with no credit history and they did not regocnize my no-claim bonus from Europe.

Cost of ownership has many different components in it, but in the West the big parts are depreciation and fuel. Again, fuel in India is a lot cheaper then in most of Europe. On depreciation I really dont know about India.

I think that comparing TCO between India and other countries might not take into consideration a very relevant factor, disposable income. Expensice, costly, cheap are relative factors. And they are very closely tied into a countries average cost of living and disposable income.

So just because on a TCO basis a car is more expensive or cheaper in one country to the next doesnt really mean much.

You might want to redefine what being ripped off really means. Very few of us would admit to buying something that we feel is worht its purchasing price. So how can you be ripped off in the first place. Just because it's cheaper somewhere else? I've never understood that.

I buy what I need, like and can afford. Do I feel cheated/ripped off if I see the same item advertised cheaper a week later. No, because at the time of my purchase I thought it was good price. So the feeling of "being ripped off" is just being offended retrospectively on your own purchasing choice.

If you don't buy your're not ripped off. If you buy something, I assume you buy it at a price that you will is fair and gives sufficient value for money.

For me the above works fine in any free market with sufficient (commercial) players and competition. If you lack choice you might feel ripped off. When I lived in Kansas City USA there was only one party providing TV and Internet services. And I ended up paying nearly five times as much as I did in the Netherlands. No choice, well the choice of having no television and internet wasn't a realistic one.

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Old 4th June 2014, 13:44   #319
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Default Re: Are Indians being ripped off ?

Most new cars(even ones manufactured locally) involve taxes as 40% of the final value.I think that has a lot to do with the pricing.
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