[alpha1]

I don't understand what is ridiculous about (any) price hike?
People are still buying.
There is a considerable demand for the product.
The sellers are happy with the volumes being sold.

If the buyers were not happy with the price, drooping demand would increase the un-billed inventory at sellers' end. Thus sellers would be forced to reduce their prices.
Remember each seller has internal goals of increasing the production from X level to X+Y level every year. Same thing goes for management's commitment to their share holders.

[bsdbsd]

Why would this be "ridiculous" from your point of view? There are price increases everywhere. Salary/Income would have seen increase every year. Companies and people prosper everyday. People spend the money on things they want at a price they feel appropriate. Its not like BMW and Audi are forcing us to buy their cars, in which case it would have become ridiculous. Why would anyone be bothered about this anyway? The more its not affordable, the more the peace of mind. Just my take on your post.

[noopster]

When the A3 was announced for the Indian market I was looking forward to it being priced around 25L on road. Considering it is the same size & feel as my Vento which costs around 12L I was willing to shell out a 100% premium for some fancy features and the luxury brandname. Imagine my shock when the entry level is priced at 30 and the higher ones touch the high 30s!

It makes so sense at all. The A3, 1-series and A-class were supposed to fetch more customers for the German Big 3. Pricing them at the same level as their one-segment-higher offerings (used to be) just makes it unfair. I could understand if there was no competition but you get perfectly good, fully-loaded cars at a third of the price so why would I even look at these?

These brands have forgotten their Marketing 101. By overpricing them and then offering huge discounts at dealer level they are killing the brands. People can and will migrate to cheaper, more sensible options. Ford, Renault, VW/Skoda, even Hyundai and Maruti will make hay.

[Maky]

This is a great thread. I've rated it 5 stars.

While I agree with the original posters opinion I think one needs to understand that if you feel a product is too expensive then vote with your wallet. Eventually the manufacturer will respond to market and correction(s) will be made, this doesn't just apply to Auto sector but universally so...

[govindremesh]

Originally Posted by Tushar

They are among the ultimate expressions of prestige, but no longer enjoy the exclusivity they once did. Today, put together, Mercedes-Benz, Audi and BMW account for ~28,000 dispatches per annum! Safe to say they are fairly commonplace now.

That explains why they moved up the ladder! Manufacturers want to retain the brand's exclusivity to a desired level, so when Indian individuals got higher spending power and became more brand aware, the German firms went in and milked the moment by escalating the prices.

I'd quote an interesting example: Skoda Octavia and Audi A3 are mechanically identical cousins, but to the general public, the Octavia is a "big car" while the A3 is an "Audi". There are people ready to pay more for the snob value of the brand, but such people are very few in number. So the sales will be limited anyway, at-least compared to the mechanically identical variants.

PS: First post on Team-Bhp.

[drmohitg]

Even I honestly don't understand this concept of raising the prices to insane levels and then offer lacs off the sticker price in name of discount. It harms the brand in 2 ways according to me:

1. Keeps away the potential customer who just no longer finds the price VFM, not knowing that there is a huge discount on the car.
2. The customer always stays in a zone of uncertainty as the discounts are not uniform and hence one is never sure how much discount is actually a good discount.

[Abhi_Automobile]

Originally Posted by drmohitg

Even I honestly don't understand this concept of raising the prices to insane levels and then offer lacs off the sticker price in name of discount. It harms the brand in 2 ways according to me:

1. Keeps away the potential customer who just no longer finds the price VFM, not knowing that there is a huge discount on the car.
2. The customer always stays in a zone of uncertainty as the discounts are not uniform and hence one is never sure how much discount is actually a good discount.

Also, the potential buyers start expecting that discount is a norm. This leads to poor brand equity.

In the current scenario, luxury car segmentation has gone for toss too. Who does CLA compete with these days? A3? Wrong. I'd say 3 series. the 3 series, post discounts, comes at roughly for the same prices at the non discounted CLA. I actually think they are pushing up the prices because they know they can get away with it. Any product (luxury or not), can only sell at price where there are customers for it.

My Jetta TDI CL@17 lakh 14 model, bought in Jan '15 on road looks like super VFM these days.

[miharbe]

Nice Thread!

Everytime i think i have the budget to buy a luxury car the prices keep increasing!

There was a time when the Q7 cost around 65 lacs. I am not too sure of the current prices but a Q5 with the same 3 litre engine should be close to this number now. I know a couple of people who bought 520Ds in 2009-2010 for 41lacs on road. The same car costs what 55 lacs now?

While there seems to be an overlap between the prices of the 3/C/A4 and 5/E/A6 there seems to be a yawning gap between the prices of the 5/E/A6 and 7/S/A8 so much so that there is a place for another segment of cars which can be introduced. Perhaps this exists in the form of the 6/CLS/A7.

Everyone was expecting the C Class prices to reduce post local assembly but that didnt happen. I wouldnt be too bullish for prices of A/B/CLA/GLA reducing once their local assembly commences.

The worst part especially for the entry level versions is the abysmal level of equipment for the money you pay or the poor state of tune of the engine.

The dream keeps stretching and stretching and thanks to the wonderful prices of the new models even the used ones are out of reach!

[Jeroen]

Originally Posted by bsdbsd

Why would this be "ridiculous" from your point of view? There are price increases everywhere. Salary/Income would have seen increase every year. Companies and people prosper everyday. People spend the money on things they want at a price they feel appropriate. Its not like BMW and Audi are forcing us to buy their cars, in which case it would have become ridiculous. Why would anyone be bothered about this anyway? The more its not affordable, the more the peace of mind. Just my take on your post.

My sentiments exactly. There is no objective price to start with. It's entirely subjective and very personal. As long as sufficient people are buying a manfucturers product, the manufacturer is doing well.

There are cars out there that even if you would give them to me for free, I would refuse to drive.

Jeroen

[Naman_Ferrari]

Excellent Thread!
We were looking to purchase a new luxury cars ourselves.
But the insane pricing was really discouraging and we decided to postpone the purchase altogether :(
I'm sure they are loosing out on sales and they should realise it before its to late...

[zenren]

Originally Posted by Naman_Ferrari

I'm sure they are loosing out on sales and they should realise it before its to late...

They might be losing 10 customers but gaining 30 new ones even with the current model due to the fact that there are too many people who want to declare their arrival into the "rich" society. I don't think these companies would need to change anything in the near term.

As someone rightly pointed out, this situation exists because the trio are in sync with this move and doesn't undercut each other. If one of them starts pricing their offering at a more sensible tag, others would be forced to follow suit since the status that a BMW provides is no different from that of Audi or Merc, even if one of them is at a lower price.

Anyone else providing a similarly priced offering wouldn't work with these folks which is clearly evident from the performance of Volvo which is another option in the same category without the aura of the German Trio.

[heydj]

Disposable income for middle class Indians is increasing. Few years back many would have balked at the prospect of shelling out 14-15 Lacs, but now one may not buy for this amount but the figure itself is not exorbitant. To keep pace with this mentality and the times German luxury car manufacturers have raised the prices, earlier also Audi's and BMW's were out of means of many now also situation is same. Brand image needs to be protected, afterall if all around us BMW or Audi then what's the point!

At the same time what has happened is that at cheaper price point features and quality offered by many Audi's and BMW's is available, this was not the norm many years back. This in my opinion will affect the sales of high end cars sometime in future, hence they need to be reasonable about the hikes.

[wilful]

I've just been trying to look up the situation of these three in a market like China. Some preliminary research shows that the Indian prices of the upper end models of the three Germans are not really out of line with the Indian prices. That too a market that sells over a million of the three combined per annum against the 10000 or so in India.
And surprise surprise... The Chinese are also complaining about the stiff pricing despite lapping up their offerings .

http://www.ebeijing.gov.cn/BeijingIn...e/t1322442.htm

http://www.cnbc.com/id/102398572

[sam003]

Why to blame only German, Toyota too did it for fortuner, launched price 18.45 now its 26. Can they justify the price hike for Innova and Fortuner?

[ACM]

Originally Posted by GTO

What you guys are talking about is more the exception than the rule.

In the late nineties, the 1st-gen Honda City Automatic cost 8.16 lakhs ex-showroom Delhi. The Honda City Automatic starts at 9.81 lakh today. How much is the inflation in this case over a 17 year period?

In the same time (as the 1st to 4th gen Honda City), the E-Class has gone from 25 lakhs to 60 lakhs! If the Honda City had to keep up the E-Class, it would cost about 20 lakhs today.

@ ACM: The Innova has seen unusual price hikes and gotten a lot of flak for it (including in our official review). Have all MPVs in its segment doubled their prices in the same period? Not the Tavera or Xylo I know.

Don't forget that cars at the lower end (e.g. Swift, WagonR) and many at the higher end (e.g. Superb, Camry) have seen far lesser hikes than the Germans. Heck, compare the price of the Esteem in 1996 & the Dzire in 2015 and you won't see much difference.

Originally Posted by Tushar

Its not just a question of the prices going up. Audacious price increases are not limited to German car brands, but they are best pronounced in the segment. The fact is that manufacturers across the board often increase the prices of their best selling models because they know people will buy them.

The Innova for example, gained its crazy price after Toyota knew what kind of demand it was getting. The MUV is often the example of unreasonable price hikes. Similarly, buyers are willing to overlook the price of the City because of its name.
Wouldn't inflation blanket every car sold in the market? Consider the models below and their current price vs price in or around 2005:
- Swift: Up from 4.30 lakh to around Rs 5 Lakh.
- Esteem to Dzire: Up from 4.85 lakh to around 5.40 Lakh.
- Wagon R: Up from 3.65 lakh to around 3.95 Lakh.
- Indica: Up from 3.62 lakh to around 4.50 lakh
- Fiesta to Classic: Down from 6.36 Lakh to around 5.60 (new diesel only Fiesta costs around Rs 3 lakh more)
- Palio to Punto: Up from 4.10 lakh to around 5.24 lakh.
- Scorpio: Up from 8 lakh to 9.62 lakh
- Bolero: Up from 6 to around 7 lakh
In all cases the price has indeed gone up, but push comes to shove it still falls short of 30% (You will find a few exceptions, but very few who can match even the bare minimum increase with luxury cars.)

I have a very different take. To elaborate.

USD in 2005 approx. in the 40's
USD in 2015 approx in the 60's
Rise 50%
Hence cars which are CBU or CKD are simply justified in a 50% rise in prices as they cost of inputs have risen.

The examples of car retaining prices within the range of 10-20% over 10 years are mostly all of cars that have 90% plus localization through there are some with 70% as well.

Yes Toyota has just been Greedy with the Innova and the Fortuner. That is not in doubt.

But any car with more than 70% import content cannot but rise prices by 30% in this period since the Rs. has depreciated by about 50% in the same period. We all know that localization for the Germans is mainly restricted to Tyres, Batteries etc. How many Made in India components do we see in the German vehicles. So with the Rs. Depreciating how can their prices not rise by at least 30%?

This Example that follows is purely from memory: I have not looked it up again so pls do currect me on this if I am wrong: Fabia after a reasonably modest price launch retained the pricing at more or less the same level for many years though it had a significant imported components share. It is also known that the company made a loss on the vehicle over the last many years. Competition made it stick to the price of drop numbers even further, but that did not imply that the cost of inputs did not go up for it. In time with later generations they did attempt cost down version but they still were at loss.

Am I missing something out here in the back of the hand calculations? 50% change in Rs. value = 30% rise in prices - Acceptable - if we indeed want some segment vehicles to continue to have components made abroad.

Specifically in 2005 the USD while at 45 it did go down below 40 in later years only to then keep rising beyond 60.

In 1995 when the E Class Merc was launched at about 25L Ex-showroom the USD was 35 vs Rs. Today it is at 47.5L Ex-showroom with the USD at 62 - Feels like the price trend is fine.