[@og_adi]

Speaking of taxes, this is what I found-

Everytime someone buys a Toyota Innova Crysta 2.4 ZX AT (in BLR) ,


[Source: Carwale]

They gift a registered Renault Kwid RXE (+7k if they want any accessories) to the government-


[Source: Carwale]

True story.

[a_chelat]

Originally Posted by atnyia

Totally second your opinion. Like you, I bought a Ciaz diesel for below 10 L in 2015. It had projectors, airbags 6 speakers and ABS. Current car prices seem insane. A proper upgrade will set me back by 22 Lacs minimum. I earn substantially more since then and yet unable to see incremental value for spending that kind of money.

My personal opinion is that I have just grown old.

"Sab mohmaya hai" ( the world is an enchantment)

I completely agree that age could be a factor Five years ago, my purchases would probably have been more aspirational, but I am considering the value more and more now (though I am not that old).


When I started looking at my options for an upgrade, I was put off by the prices. My Vento drives well, is spacious enough and feels quite safe. Like you, I just couldn't see the value in paying the kind of money that would see me own a car from a higher segment; I personally don't see replacing a car with another one in the same segment as an upgrade, although that is what the current pricing will get me. Another factor in my case was that I didn't really need an upgrade, it was more of an itch for a new purchase.


However, the current market doesn't seem to mind the so-called overpriced cars and the manufacturers are not going to reduce their margins for a minority. Like others have said, its all a matter of perspective and perhaps age is influencing ours.

[84.monsoon]

One cannot ignore the increases in prices of inputs. The price of steel has nearly doubled from 2016 to 2021. The price of rubber has increased 70% in the same time. Aluminum prices have gone up 50%. Prices of plastics have gone up as well, to a similar extent. In addition, evolving safety and emission norms has made more and more equipment compulsory - be in BS6 emission control equipment, or mandatory safety equipment like Airbags, ABS etc.

Industry cannot absorb these kinds of cost increases. It will eventually have to be passed on to customers. The government could cushion the blow if they relaxed GST rates to promote economic recovery, which they have steadfastly refused to do. No wonder, then, that car prices are up 50% at least in the last 5 years. Manufacturers hide some of the increase by launching starting variants at lower prices that match the previous generation price brackets to avoid total sticker shock, but make available such low volumes of these variants that are almost impossible to get ones hands on. The actual average realization across variants has moved in line with increases in costs, I don't see any other way industry can respond - after all, they are a business and need to make profits to satisfy their shareholders.

The best way to shop if one is on a shoe-string budget and expect to buy cars at last-gen prices is to wait and watch for new launches especially the lower variants of these. If one is open to some after-market "souping up", there are bargains to be had as new models are launched or existing models are refreshed. This is an especially viable strategy these days, as basic safety features like airbags, ABS and reverse parking sensors are mandatory, so every car has these. Many of the comfort/aesthetic features such as alloy wheels, modern ICE system, better headlamps, better seat covers etc. can be easily installed after-market at reasonable prices. For instance, the base and mid variants of recent launches such as the Nissan Magnite (4.99 lakhs), Renault Captur etc. were decently priced. The base Hyundai Creta EX petrol, at launch last year, had mostly all necessary features at a tempting price of 9.99 lakhs. Ford still sells the Ecosport Titanium variants at 9.99 lakhs. So if one wants to have a "blank-slate" shopping approach, where the ideal car is sought and then the prices are checked, I agree the prices increases are shocking. However, if one makes the price an important part of the car selection strategy from early on and is prepared to wait for the catch, there are still satisfying purchases to be made out there.

[hortons15]

Originally Posted by wildsdi5530

Can someone do an actual costing of a car based on its parts breakup, eliminating the taxes at every level from raw material to finished product?

Originally Posted by NetfreakBombay

This should be zero.

GST does not cover import duties. If say a car was 50% localised, the manufacturer would be paying varying amounts of import duties on the rest of the imported parts ( % slabs for different kinds of parts) and I don't think we'll be able to estimate that without an inside source at the manufacturer.

[Amey Kulkarni]

No doubt the cars are overpriced with GST and Cess coming in and to further worsen the scenario the fuel prices are over the roof as well.

But, the real question is has it stopped Indians from buying new cars?

Look around and see how many Crystas, Endeavour and Fortuners we get to see on road. Looks like the richer are getting richer and the poorer getting poorer. The trend has even gone further where you'd see peeps owning two cars at least per family stating city car, highway car, weekend fanatic etc.

Further, not forgetting the depreciation and tax benefits you get being an entrepreneur. Peeps tend to use this mechanism to their advantage as well. Its the salaried masses where there's a major hue and cry of inflation and challenges when scouting for a small family car or an upgrade; as the salaries don't increase drastically as the market does. God bless us with the pandemic ensuring it gets tougher by the day.

Its high time Indians learn to look at the other side of the coin by going the pre-worshipped way.

Cheers
Amey

[Mynameis]

IIRC S class costed 90-95 lacs on road in 2010, a decade later its at 2.5 crores. What did they improved/ added worth 1.5 crores?

Yes, addition of features, inflation are natural ingredients for price surge but ratio of price increase and value added does not look proportional to me (ofcourse customer getting the stick), across all segments may be except entry level hatchbacks.

[Cavityavenger]

Originally Posted by Mynameis

IIRC S class costed 90-95 lacs on road in 2010, a decade later its at 2.5 crores. What did they improved/ added worth 1.5 crores?

Yes, addition of features, inflation are natural ingredients for price surge but ratio of price increase and value added does not look proportional to me (ofcourse customer getting the stick), across all segments may be except entry level hatchbacks.

Devaluation of the rupee. In 2010, USD-INR was 40, now it's close to 80. Not only has the local currency lost half of its buying power in 10 years, but the taxes on the automobile sector have also gone up significantly.

[thechinmay]

By and large I think most localized cars have kept up with inflation. A 3rd generation Honda City manual in 2010 was about 9.5L on road in Pune. Today the City V is about 13L for a car with much more equipment. However, the City essentially has the same engine (with a few changes to keep up with emission norms) from 10 years ago - thus saving money on R&D and manufacturing facilities.
CKD and CBU cars, of course, have had to contend with the double whammy of inflation coupled with rupee depreciation as well.
What is more concerning, however, is the slower increase in incomes. Considering an average of 6% inflation from 2010 to 2021, 10L in 2010 is worth a little under 19L today. An increase of 89%.
Worryingly, per capita income in PPP dollar terms is up only 65% in the same time period. This means that everything, not just cars, is a good 25-30% more expensive than it was a few years ago.

[swiftnfurious]

I believe the sole contributing factor is "demand". In the last 5-10 years, the demand has not declined, save for few months of lockdown (and because people couldn't buy as shops weren't open). I had a 2008 Swift VDi ABS which cost me 5.8L OTR Kerala.. 5 years later (2013), I wanted to upgrade and was ready to pay 10L (doubling my previous purchase cost) and I was surprised (or shocked) I could buy a Swift at 9L !! Same 1.3L engine, same output, thinner build, few extra features & a top variant, pretty much the same (un) safe car as first gen ! That's when I realized that the new cars have gotten way too expensive.

I decided not to indulge in a brand new car - got a pre owned Palio instead; used for 5 years and last year, I bought a pre-worshipped 2015 Fiesta D Titanium. True upgrade to a Swift by all means and at almost half the price of a brand new Swift.

[IamNikhil]

Originally Posted by swiftnfurious

I decided not to indulge in a brand new car - got a pre owned Palio instead; used for 5 years and last year, I bought a pre-worshipped 2015 Fiesta D Titanium. True upgrade to a Swift by all means and at almost half the price of a brand new Swift.

Personally know many people in my circle who have opted to go the pre-worshipped route instead of shelling out the big bucks on a brand new vehicle. Considering how brands have jacked-up their prices, rate of depreciation and government levies, it does make sense to invest in an immaculate second-hand car, use it for 3-5 years and repeat!

[R_Gowardhan]

Originally Posted by thiagust

Can my fellow bhpians throw some light?. I have shelved my plans for an upgrade ( was planning to go for a Compact/Mid size SUV with a proper AT ).

If you wind the clocks back to 2013, the Indian geography was considered as the next big thing by auto manufacturers and each of them wanted to capture a lion's share of the market. All major car brands were competing in volume based segments and focus was on price. What the CSUV segment is today, the so called Premium Hatch segment was then I.e. everybody wanted one. Huge volumes were expected from people upgrading from their entry level cars. Features were a 'good to have' thing and not a necessity like it is today.

Fast forward to 2021, the following realizations have sinked in:

1. Car manufacturers, who have burnt their hands in the pricing game and seen a few peers winding up shops, have shifted focus on keeping costs low but margins high.

2. Customers are ready to pay a premium for those bells and whistles. You see a lot more top end models on road today that what you saw in the yesteryears. Peer pressure is no more only on what car do you own but also on what all your car can do for you.

As a result, we are witnessing a near monopoly(read 'Alto'poly) in the entry level segment, compact sedans becoming the new entry level choice, array of choices in the Premium hatchback segment, low involvement and excitement towards the C segment sedans and an extremely busy Compact Suv segment As a result, we are witnessing a near monopoly(read 'Alto'poly) in the entry level segment, compact sedans becoming the new entry level choice, array of choices in the Premium hatchback segment, low involvement and excitement towards the C segment sedans and an extremely busy Compact Suv segment.

Also, manufacturers are loading the cars with features to the brim as with each feature addition, they are able to justify the higher price.

[hdman]

I did an analysis about this a few months back and I was surprised to see the results.

My dad bought a Maruti Suzuki 800 (base model) in December 2000. Although, I don't remember the exact quotation but he paid approx. Rs.2,25,000 at the time. (Please correct me if anyone remembers the actual quote.)

I took the inflation number from Inflation.eu (https://www.inflation.eu/en/inflatio...ion-india.aspx) and found that if you compound that to today's Rupee, it comes around Rs.8,27,575. (I cross checked the numbers with Bloomberg and they are close)

So essentially, in 2000's Maruti prices you can get a GNCAP 5 star rated Tata Altroz XT in Mumbai. I was certainly taken aback.

Let's take another example, Honda City iVTEC ZX MT costs Rs.15,92,756 in Mumbai as of July 2021. When accounted for inflation, the car would cost Rs.4,15,973 in 1997, when the original was launched. So in real terms, Honda City didn't just get better over time but also got cheaper.

Since, OEMs have to make profits and take account of costs in real terms (i.e. adjusted for inflation), the costs today are sort of justified if you really think about it. Let me leave you with another take from this analysis, there are high chances that you have been paying almost the same money (in real terms) while upgrading cars over the years. The thought is, the cars aren't getting expensive but the rupee is getting cheaper.

Attaching the spreadsheet here. Please let me know if I made an error anywhere.

Best,
Harsh Dhiman

[CosmicWizard]

We simply fail to realize how much inflation is eating into worth of a rupee. The other day, I was shocked to learn that the Civic I bought for 16L in 2010 now costs 23L. But then in dollar terms, back then it was $35k and now $31k so actually its much cheaper now. Having said that, paying $31k for Civic is pretty expensive too but the blame for that lies squarely with our "socialist" governments charging ungodly taxes and not the manufacturers.

And its not just the cars which have gone up in price. Back in 2005, I was paying my driver Rs 4.5k per month and that was the norm in Bangalore but good luck finding a driver at even Rs 30k now...

[vipinS]

I own a Honda city S MT 2011 model and I bought it for 8.65lakh on-road. I don’t see any true replacement of it under 15 lakh rupees now and a desirable upgrade under 30 lakh rupees.
And I agree with general sentiment here of how average income hasn’t increased as per the inflation.

[Apex1815]

Cars are way overpriced in India. My observation is that in the recent years there have been frequent increase in the Prices. There are various factors contributing to the increase in Prices:

1) Increase in the Regulatory requirements:
In the recent years there has been increase in the regulatory (& certification) requirements in CMVR, Example : Passenger Seat Belt Indicator, Two level speed warning (First at 80 km/hr, second t 120 km/hr), Mandatory Driver and passenger airbags.
There are many such examples of Standards & Regulations requirements which OEMs need to comply thus lead to increase in the input cost.

2) Mandatory Three years insurance :
Since the year 2018 it is mandatory to get Three years car insurance at the time of buying (Atleast Third party insurance for 3 yrs & one year for self damage).

4) Increase in Logistics Cost :
Because of steep hike in Diesel prices in the last 5~6 yrs.

5) Increase in Inflation Rate :

6) Taxes:
GST : 28%
Road Tax (Eg is highest in Karnatka) :
14% for cars costing 5 to 10 Lacs (Ex-showroom)

This is the most painful component in the overcall cost of a car to the the customer.
Despite paying such heavy taxes we do not have good roads in India and we have to pay heavy Tolls on Highways.