Newer cars: Value for money or loss thereof?

Ram · 3rd March 2008, 11:54

At the end of the day, the law of demand and supply says that:
the buyer decides the worth of the product. Not the seller.

The consumer does not care, what it costs to design, import, produce, transport, stock, etc.
Success or failure in the market depends on perception of value for money.

Today you can buy a working used car in USA for between Rs. 32,000 to Rs. 2,00,000.

Here is a 1989 Honda Civic Si hatchback for US$ 800 or best offer.

And a 1999 Honda Civic Si hatchback for US$ 5,200 or best offer. This car has zero rust, mint-condition body, Airbags, ABS, cruise-control, Michelin tires, extremely clean condition...

Anybody doubt the authenticity of the ads? Here are URLs.
http://mississauga.kijiji.ca/c-cars-...QAdIdZ38393671
http://mississauga.kijiji.ca/c-cars-...QAdIdZ40242936

Why can't we buy at these prices in our market?

Because of demand and supply manipulation.
If an odd man advertises at this price, a used-car dealer will pick up the car, mark-up the price and put it out in his used-car lot for sale.

But, if the market were to flood, with new cars at low prices, used car prices will drop to levels affordable by the commoner. Methinks that day is coming.

How much lower in value to the user, are these Hondas than brand new Hondas of the same size?
Which brings us to the topic of this thread:
Are the newer cars: value for money or loss thereof?

Ram

narayan · 3rd March 2008, 12:25

interesting thread...

"value for money or loss thereof "

that made me thinking -
1) value for money from then to now is first a factor of value OF money itself from then to now
2) what constitutes VALUE from then to now

looking at value OF money - value OF money is falling - meaning - Rs100000 back "then" had more VALUE than Rs100000 now - but if you look at the automobile industry - Rs100000 can buy much more NOW than what Rs100000 can buy THEN..

so has the automobile industry bucked the trend as far as prices go compared to other goods and services ? - i think YES.. ( now this factors in all the changes that happened in the industry - like better policies, more options etc etc )

2) what constitutes VALUE now compared to "then "

VALUE then was a set of features like good braking , good space, more refinement, ease of driving and of course economy - i mentioned these points based on what would have been in the mind of a M800 buyer when he compares it with a AMBY.

VALUE now is entirely different - people take front discs, refinement, ease of driving ( PS etc ) for granted..economy is also taken for granted ( or atleast the benchmarks have changed ).

VALUE now is more like, ABS, EBD, convenience features inside the car, entertainment products inside etc etc..

looking at both the above factors, i think we ARE INDEED getting more for our Rupee than before..

Ram · 3rd March 2008, 14:28

Quote:

Originally Posted by narayan

... Rs. 1,00,000 back "then" had more VALUE
than Rs. 1,00,000 now - but if you look at the automobile industry - Rs 1,00,000 can buy much more NOW than what Rs 1,00,000 can buy THEN..

so has the automobile industry bucked the trend as far as prices go compared to other goods and services ? - i think YES.. ( now this factors in all the changes that happened in the industry - like better policies, more options etc etc )

Prices of disappearing natural resources: fossil fuel, minerals, gemstones, timber, price of land, food, ..., are costlier today as compared to the past.

However price of man-made technology is getting cheaper and cheaper as we progress...

I bought a 1 gigabyte hard disk drive to back up my PC in Mumbai for Rs. 10,000 in Feb. 1997. Today, 10 years later, I can buy a 1 gigabyte flash drive for just Rs. 200.

And consumption has gone up too !
As an aside, now, I need 512 gigabytes to back up my PC !

By 2010, 52% of the total spend in a new car's development will be only in electronics and software. I suspect we're not far off from 52% even today.

This spend percentage ends up mirroring the spend in aircraft development.

Last year, U.S. defense company Lockheed Martin reportedly sold F-16 fighter jets to the United Arab Emirates for around $80 million per aircraft. Previously, an F-16 garnered a price of around $32m - 37m. But Lockheed Martin more than doubled the price of an F-16 by installing new combat software and additional equipment.

So the additional $45 million expense per aircraft, was only on upgrading electronics and software on a $35 million aircraft. So 56% the cost of the aircraft is only embedded software.

Look at bottom-most-rung automotive pricing over the past century.

3rd March 2008, 11:54	#16
Ram Senior - BHPian Join Date: Dec 2005 Location: Singapore, Mumbai, Nagpur Posts: 2,166 Thanked: 219 Times View My Garage	At the end of the day, the law of demand and supply says that: the buyer decides the worth of the product. Not the seller. The consumer does not care, what it costs to design, import, produce, transport, stock, etc. Success or failure in the market depends on perception of value for money. Today you can buy a working used car in USA for between Rs. 32,000 to Rs. 2,00,000. Here is a 1989 Honda Civic Si hatchback for US$ 800 or best offer. And a 1999 Honda Civic Si hatchback for US$ 5,200 or best offer. This car has zero rust, mint-condition body, Airbags, ABS, cruise-control, Michelin tires, extremely clean condition... Anybody doubt the authenticity of the ads? Here are URLs. http://mississauga.kijiji.ca/c-cars-...QAdIdZ38393671 http://mississauga.kijiji.ca/c-cars-...QAdIdZ40242936 Why can't we buy at these prices in our market? Because of demand and supply manipulation. If an odd man advertises at this price, a used-car dealer will pick up the car, mark-up the price and put it out in his used-car lot for sale. But, if the market were to flood, with new cars at low prices, used car prices will drop to levels affordable by the commoner. Methinks that day is coming. How much lower in value to the user, are these Hondas than brand new Hondas of the same size? Which brings us to the topic of this thread: Are the newer cars: value for money or loss thereof? Ram
	() Thanks

3rd March 2008, 12:25	#17
narayan Senior - BHPian Join Date: Aug 2006 Location: Singapore Posts: 3,114 Thanked: 2,372 Times View My Garage	interesting thread... "value for money or loss thereof " that made me thinking - 1) value for money from then to now is first a factor of value OF money itself from then to now 2) what constitutes VALUE from then to now looking at value OF money - value OF money is falling - meaning - Rs100000 back "then" had more VALUE than Rs100000 now - but if you look at the automobile industry - Rs100000 can buy much more NOW than what Rs100000 can buy THEN.. so has the automobile industry bucked the trend as far as prices go compared to other goods and services ? - i think YES.. ( now this factors in all the changes that happened in the industry - like better policies, more options etc etc ) 2) what constitutes VALUE now compared to "then " VALUE then was a set of features like good braking , good space, more refinement, ease of driving and of course economy - i mentioned these points based on what would have been in the mind of a M800 buyer when he compares it with a AMBY. VALUE now is entirely different - people take front discs, refinement, ease of driving ( PS etc ) for granted..economy is also taken for granted ( or atleast the benchmarks have changed ). VALUE now is more like, ABS, EBD, convenience features inside the car, entertainment products inside etc etc.. looking at both the above factors, i think we ARE INDEED getting more for our Rupee than before..
	() Thanks