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Old 23rd November 2010, 14:24   #31
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Hypothetically you could be correct that it is premium that Honda charges. But why would not Honda reduce the premium and sell more cars and thereby earn more than just by selling fewer cars with Jacked up prices.
Selling more cars may not be the same as earning more.
If I am able to sell 100 cars at 100 Rs profit each earning totally 10000Rs.
Instead if I decide to sell at 50Rs profit, then I would have to sell more than 200 cars to get the same profit. If I end up selling just 100 - 199 cars, I am worse off by selling more cars.

Other than that, they may think that pricing it higher gives them a better image, makes the car a non-common car etc which may work better for their brand.
In all of the advanced countries, the Civic is regarded as cheap, reliable entry level compact car. In India it's regarded as a luxury, mid-size car. They may want to preserve that image.


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Its a competitive world, and after exhausting growth in developed market all are looking into developing market to expand and grow.
My view is that companies would prefer to sell more pieces and earn more.
India is still a very small market - people are here hoping that the car market here will expand - it's not yet a market where they sell lots of cars.
Increasing their sales in the US by 10% per year will be more important for them than doubling their sales in India.
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Old 24th November 2010, 13:49   #32
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Selling more cars may not be the same as earning more.
If I am able to sell 100 cars at 100 Rs profit each earning totally 10000Rs.
Instead if I decide to sell at 50Rs profit, then I would have to sell more than 200 cars to get the same profit. If I end up selling just 100 - 199 cars, I am worse off by selling more cars.

Other than that, they may think that pricing it higher gives them a better image, makes the car a non-common car etc which may work better for their brand.
In all of the advanced countries, the Civic is regarded as cheap, reliable entry level compact car. In India it's regarded as a luxury, mid-size car. They may want to preserve that image.




India is still a very small market - people are here hoping that the car market here will expand - it's not yet a market where they sell lots of cars.
Increasing their sales in the US by 10% per year will be more important for them than doubling their sales in India.
I tried to get the annual report of Honda to verify the numbers instead of speculating. Honda doesn't give India specific numbers and revenues. So could not argue with facts.

I understand the pricing policy to have the premium image. I think if that is the policy, then they are wrong with pricing Jazz. They should have lowered the premium to reach the tipping point.

Even if I agree that Honda charges premium, it is because of the bottleneck. Our policies and infrastructure are poor, blocks the market development into a transparent competitive one, and hence Honda charges premium.
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Old 24th November 2010, 14:38   #33
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Even if I agree that Honda charges premium, it is because of the bottleneck. Our policies and infrastructure are poor, blocks the market development into a transparent competitive one, and hence Honda charges premium.
How come other companies like Maruti, Hyundai, Chevy, Ford are able to work around this bottleneck?
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Old 24th November 2010, 14:53   #34
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I think (and also pointed out by so many others) volume is the single most decisive factor. Although the mindless tax regime implemented on automobiles in our country also contributes significantly. Think of this, Maruti Udyog the largest share holder (almost 50%) produces about half a million cars every year in India and no other manufacturer comes close to them. There are more than 5 car manufacturers in US who produce more than a million cars each year, and a couple of them produce more than 2 million each year.

Source - Motor Intelligence by Autodata - Automotive Marketing promotions, data and analysis

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Old 24th November 2010, 15:42   #35
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How come other companies like Maruti, Hyundai, Chevy, Ford are able to work around this bottleneck?
They aren't. We are paying premium for them too. If there is requirement for the mini cars that we are using in developed markets, then the cost of the same would be far lower than what is offered in India.
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Old 24th November 2010, 16:03   #36
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They aren't. We are paying premium for them too.
I don't agree.

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Originally Posted by KumaravelS View Post
If there is requirement for the mini cars that we are using in developed markets, then the cost of the same would be far lower than what is offered in India.
I think for Hyundai, Maruti etc any difference in cost abroad & in India should be accounted for by economies of scale & taxes.
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