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Old 22nd June 2010, 04:23   #16
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@Aniketi - I'm aware of this fact long back. Let me give an example with a motorcycle. When I bought Suzuki Max100 in 97, it costed 37K on the road & was supposed to be one of the cheapest 100CC motorcycle. But check out the prices now they're almost the same considering the inflation & price rise on other items. All in the game of demand-supply.

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Petrol - Rs 20 per lit / Rs 52 per lit
Food Items - Aprox 200 - 300 % rise (minimum)
Commodities like gold - Rs 4000 per 10 gms / 18000 per 10 gms
Property prices - Approx 200 - 400 % rise in big cities
Let me also bring up another fact that all man made items (except exotics such as Ferrari, Jag, Merc, Lambos) all other man made items loses value over time. All the above ones are natural substance & are limited in number on this planet. For that matter add water to your category too. In few years one can witness the loss of pure water with increase in price for drinking water.
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Old 22nd June 2010, 08:29   #17
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Quote:
Originally Posted by n.devdath View Post
Also, cars and bikes are not cheap in India compared to their identical models manufactured abroad. Take the case of the Fortuner, the Corolla or the Accord for example.
Thats because of input costs.

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Originally Posted by rjalihal View Post
Technology is getting cheaper, yes. But the cost savings are not being passed down to the end user. So we end up paying the same price, if not higher for certain commodities. Cars being one of them.
I beg to differ. Ever heard the term 'Real Value of Money'?

If you take into consideration real value of money, car prices have come down.
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Old 22nd June 2010, 09:30   #18
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Originally Posted by prateek99 View Post
Thats because of input costs.
So, do you mean to say that raw materials and/or labor costs are more expensive in India compared other countries? I find it hard to believe...
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Old 22nd June 2010, 10:51   #19
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Thanks guys for all your replies. I agree that due to technology things are getting cheaper, but that is more applicable to electronic items. In cars there are things like metal, plastic, glass, rubber etc which are inflated drastically in last 10 years. Specially metal which is the key factor here. Still auto prices are almost same.

As someone said cars / bikes which are not sold in good numbers & are dated only those are cheap. But if you see new launches like Figo, Beat, Manza etc, all these cars are new & very price effective. Basic Manza petrol on road price here in Pune is 5.5 Lacs. 10 years back as well there were cars like Esteem & Cielo that were costing same or even more than that. Figo you are getting in 4-5 Lacs, before 10 years cars like Matiz, Santro, Wagon R were selling at same price range only. But todays cars are more advanced & with more good quality for sure. Engine performance has improved drastically. Still if you consider all these factors cars are not got costlier at all. & if some are increased that is also marginal like 10-30 %. If you see other things, those are inflated around 200 - 500 %.

Just consider like this : 10 Years back basic low cost car was around 2 lacs, its the same now. Good hatch was around 5 lacs, its also the same. Sedan was around 7 lacs, its the same as well now
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Old 22nd June 2010, 10:56   #20
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[quote=n.devdath;1947782]So, do you mean to say that raw materials and/or labor costs are more expensive in India compared other countries? quote]

Yes sir. Except for RM cost, everything else in India (and other developing countries) comes at a cheaper price. Lower overheads, lower manpower costs, lower sales and distribution costs (because of poorer infrastructure) etc.

Just to give an example, our handsomely paid IT workforce is still underpaid as per the global standards, but thats what has helped India gain its dominance. You can correlate this with other industries as well.
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Old 22nd June 2010, 11:33   #21
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[quote=prateek99;1947933]
Quote:
Originally Posted by n.devdath View Post
So, do you mean to say that raw materials and/or labor costs are more expensive in India compared other countries? quote]

Yes sir. Except for RM cost, everything else in India (and other developing countries) comes at a cheaper price. Lower overheads, lower manpower costs, lower sales and distribution costs (because of poorer infrastructure) etc.

Just to give an example, our handsomely paid IT workforce is still underpaid as per the global standards, but thats what has helped India gain its dominance. You can correlate this with other industries as well.
Precisely, so cars here should be cheaper than their counterparts abroad right? But they are costlier, which means that manufacturers here are making more profits by selling their goods for higher prices inspite of lower costs.
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Old 22nd June 2010, 11:38   #22
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[quote=n.devdath;1948026]
Quote:
Originally Posted by prateek99 View Post

Precisely, so cars here should be cheaper than their counterparts abroad right? But they are costlier, which means that manufacturers here are making more profits by selling their goods for higher prices inspite of lower costs.
Guys, i guess taxes play spoil sport here :( There are plenty of taxes here. Excise, Sales tax, Road Tax, Insurance, Octroi & what not ... Else Ex factory cost is always less.
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Old 22nd June 2010, 12:43   #23
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@n.devdath

I guess I misread your statement and countered it instead of supporting it with facts.

PS: Feels so good not to wait for comment to go online.
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Old 22nd June 2010, 13:02   #24
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Competition also play a major factor in the price structure. How many brands/models are available in market now?
Imagine, few years back what we have amby and fiet cars and one has to wait years after booking to get the vehicle delivered. Now, the situation is totally changed.
So, car /two wheeler manufacturers are compelled to check the price levels inorder to be active in the market /competition.
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Old 22nd June 2010, 14:39   #25
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I agree with you nairrk. Apart from competition, the number of vehicles produced few years back and now is risen by many folds. The companies are able to produce more products at lower cost as econimies of scale play a role here. Manufacturers have developed more vendors so there is a huge competition in vendors also. Also with use of modern machinery and manufacturing techniques, manufacturers produce more products with minimum cost.

Atleast in automobiles customer is king!
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Old 23rd June 2010, 16:03   #26
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I agree with you regarding the purchase price. But what about the total cost of ownership when you consider the:
  • Service Costs
  • Fuel Charges
  • Insurance Charges
  • Taxes
  • Tolls & Parking Charges
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Old 24th June 2010, 11:08   #27
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Quote:
Originally Posted by sunil8089 View Post
I agree with you regarding the purchase price. But what about the total cost of ownership when you consider the:
  • Service Costs
  • Fuel Charges
  • Insurance Charges
  • Taxes
  • Tolls & Parking Charges
Yes, these charges are surely increased but that is not in our or manufacturers hand. We are getting the cars at good price that is what i am talking here.
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Old 24th June 2010, 14:34   #28
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Let me show a simple math. During mid 80s, IIRC, M800 was launced around the price of 85K. Considering 6% inflation & 26 years (from 1984 to 2010) the price of M800 should be somewhere around 3.87 Lakhs; however it is not. To me it shows that the price has come down. Period.
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Old 13th July 2010, 01:32   #29
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These Car Makers are exploiting the market demand.But soon this high sky fly will end. There are more than 5 models of hatch cars are preparing to hit Indian market. As per a web survey report, MUL will get a hard-hit.
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Old 13th July 2010, 07:51   #30
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There is another aspect which does not seem to hit the radar - the linkage between:-

a) Price of new vehicle.
b) Rapid depreciation in value of new vehicle.
c) Cost of replacement spare parts.
d) Value achieved by re-cycling a vehicle for spares.
e) Bill of materials for new vehicle.

Some vehicle brands lose huge values on the street, but their used parts are still the same as those required for newer vehicles, and this may sound like small business - but it is rapidly growing.

So what does the manufacturer gain by reducing margins on new vehicles, in the above scenario?

+++

In addition, cost and timeline of R&D, which used to be huge not so long ago, has come down drastically.

+++

All these, and more, have kept prices at level. However, it is likely that the coming bout of inflation will finally provide the hike. After all, the first M-800s cost well below Rs 50k when they were first launched, and Ambassadors were for around the same price.
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