[thiagust]

I have been looking for an upgrade on my GT TSI 2013 model and have been blown away by the recent pricing trends in Indian auto scene. For instance Hyundai Alcazar starting at 17 Lakhs ( ex Showroom) and Skoda Kushaq at the same price range. A lot of these cars have heavy localisation involved and could never understand the rationale behind the pricing. For instance Hyundai has literally the same engine in different states of tune ( I could be wrong though). How is the pricing even justified. When I bought by TSI in 2013 , the DSG and the TSI engine - both were imported and hence the pricing was 9.3 L On road.

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 ).

[puntOOs]

Originally Posted by thiagust

I have shelved my plans for an upgrade ( was planning to go for a Compact/Mid size SUV with a proper AT ).

I needed an upgrade from my Punto. Especially with EVs going to takeover in 3-4 years, new car prices didn't make any sense. I bought a used VW Jetta this month that ticked most of my boxes instead.

[museycal]

The interpretation or inference of something being overpriced has to lie with the decision maker. That said, the cars of today, usually deliver creature comforts, safety features and powertrain combinations that justify their prices. I mean, I identify myself with the 'upgrading to a new car' quandary, as I am myself on a lookout for one. And, the idea of buying a sub-4 meter car for Rs. 15 Lakhs is something I am still trying to make peace with. But, if I set aside my preconception of buying a 'big car' with my 15 Lakhs, I see cars like XUV3OO or Nexon offer me some of the best safety net (7 airbags in XUV, ESP, ISOFIX seats, ABS+EBD, 5 Stars GNCAP rating etc.) with competent powertrains (albeit manuals), City VX, Sonet, Venue etc. with nice interiors, features and powetrains (DCT, CVT or TC Autoboxes) etc. Similarly with cars like Creta, Seltos, Harrier, Hector etc.

The rise in input costs, demand driven price increase and inflation effect aside, I am getting a feeling that the price & variant spreads of various cars today are just stupendous. Sub-compact SUVs like Sonet, XUV3OO, Nexon etc. straddle price range right from Rs. 6.92 Lakhs all the way up to Rs. 13.3 Lakhs. Same with Creta, Seltos, Harrier etc (almost Rs. 7 Lakhs difference between the base variant to top variant).

The feature lists and safety kits of new cars today are real differentiators and these go someway in justifying the increasing prices after the inevitable reasons like inflation, increasing material costs, supply demand gap etc. Trouble is, if a certain buyer is not too keen on the features etc. and is just on a lookout of a nice driving, nice handling, down-to-earth, honest-to-god and corner-to-corner smile inducing car in a budget, he/she will HAVE to pay the top rupee for the top variant of such a car, as low down the value chain, you may only get ho-hum engine-gearbox options.

[nitkel]

Fact is that car prices have kept pace with inflation, while salaries in most jobs have remained stagnant. Hence, now when people look to upgrade 7-10 years down the line they find that one will get roughly the same segment car for 1.5-2 times the price, with a few extra, sometimes useless, features thrown in!

[2000rpm]

The 10 lakh cars of yesterday, didnt have so many features which are a standard now

• Airbags, ABS, EBD, etc (I think the first gen City, didnt have a single airbag, my Civic 2007, had 2)
• Android Auto and Apple Car play
• Longer warranties
• Rear view camera and sensors
• Automatic wipers and headlights and IRVMs
• Auto folding mirrors
• All 4 power windows
• Sunroof
• Rear AC
• Detailed MID with so much data
• Connected Car tech
• Much better driving dynamics, especially for SUVs (try the first gen Scorpio sometime)

With so many additions, I think its natural for 10 lakh city to be at 17 now, especially after factoring in Inflation.

[Rajeevraj]

There is another thread that discusses something similar (Overpriced cars : Myth or reality?). Overpriced is a relative term and manufacturers are pricing as per what the customer is willing to pay. So as long as the customer is willing to pay, prices will keep going up. Also, no denying the fact that cars are much more well equipped today than 8-9 years back.

Having said that, totally agree with your point. When we upgrade in most cases we would like to go up a segment at least. Unfortunately the purchasing power increase is not in line with the price increases we are seeing.

I own a 2013 Vento and to upgrade to a next segment today, it would mean I need to shell out at least 30L+ for a D Segment sedan or its equivalent. Even to buy one of the Urban 'SUV's' , which would technically not be an upgrade in segment, I need to shell out close to 20L. I have also decided to hold off for as long as possible and then go the pre-owned route.

[ramnaresh_2000]

I was sailing in the same boat few months back when I was looking for a replacement for my TUV. It was a 2017 vehicle and was around 12.5 lakhs on road, I had to pay 2.5 lakhs bank loan interest and around 50k was spent on accessories. The total cost was around 15.5 lakhs (not including diesel, service, spares, labor, detailing and insurance costs which were another 1.5 lakhs. Don't even get me started with fuel costs). When I was looking at top end XUV300 and Ecosport, they were costing me around 14.8 lakhs on road and plus other expenses like bank loan and accessories.

This got me thinking, is it worth to spend a 15 big ones on a sub 4-meter SUV? I was not able to digest this fact. I felt like every vehicle I liked was over-priced. I contemplated on low end models of higher segment vehicles like Harrier XE which was around 15.8 lakhs on road and it was around 16 big ones. Then again it was bare bones.

I think it is inflation that is to be blamed, having said that I can also see that with advancement of technology we are getting features like airbags, ESP, CC and TC on most of the vehicles as standard these days. If we put some monetary value to these features, they may come to up around 50-70k and rest are taxes. My 1st gen Verna did not even have ABS and it costed 10.5 lakhs few years back. I think that in few cases like Seltos/Creta the value proposition is excellent and again with vehicles like Compass and Alcazar the cost is not justifiable and they are at least 2-3 lakhs expensive.

Also pre-owned is the way forward if you ask me. Loving my pre-owned Compass to the core and it is excellent value for money.

[GNG19]

I think it's a combination of inflation, rising input costs, a weakening Rupee, and finally taxes.

Try deducting the tax from any of the cars mentioned on the thread and seeing how much it would cost without the government's cut. Or substitute our tax with how much you would have to pay in the US for a similar product. I think this, in itself, will give you an idea why cars cost so much over here.

[TrackDay]

Inflation along with price hikes in various sector have caused this to a larger extent. Not to mention knee jerk reactions by the authorities. Another factor is the taxing policy which sees cars more as things of luxury rather than a necessity. It really leaves no other choice other than cars getting expensive.

I feel car prices are only going to go uphill from here. The beginning of the end of ICE cars have started taking place. Although everyone has starting pledging to be fully EV at a certain point in the future, only time will tell how many will be successful. So it is the endgame now before the next era dawns in and many are trying to make hay while the sun still shines.

[YashD]

It's the taxation which makes the car expensive in India. For e.g I just bought the Seltos HTX IVT Last year and here is the price break up just for the Ex-showroom price:-

Price of the Vehicle - 9,88,965
+ GST (28%) - 2,76,910
+ Cess (17%) - 1,68,124
+ TCS (.75%) - 10,755

Total - 14,44,755

Now, on this you add the remaining charges i.e registration, insurance etc and on that too you're paying a certain GST. In the end, when you're buying a car, almost 50% price is paid to the government. So, yes! Indian cars are overpriced drastically but I won't blame the manufacturers here but the government who has been taxing the automotive sector like absolute maniacs!

[chautob0t]

Inflation, rising input costs and poor tax policies in states like KA have certainly made a big difference. Some of the cost increase is justified but hatchbacks and CSUVs touching 15 on road is just not right anywhere.

With better build, safety and engines -- most cars today are better than best cars of the past in their respective segments. I find base models of most cars priced in a VFM manner. For higher spec models - safety equipment, infotainment, paints, lights etc are severely overpriced and as you go for higher spec models the VFM ratio falls very steeply.

[Turbohead]

Inflation, depreciating ruppee, ever increasing taxes, availability of high tenure loans, stagnating incomes have driven car prices to insane levels.

The golden ages are done and we won't be seeing any improvements in the overall situation for the next 10-20 years(hope I'm proven wrong), unless people who are in charge agree that something is really wrong and do something about it.

I remember 6 years ago, people used to change their cars every 4-5 years. Why? You could get a good upgrade for a reasonable amount of money. Today almost all of them are holding on to their cars because the cost to upgrade is ridiculously high. In fact, if you want a car of the same segment you need to pay more than the initial capital you put in to your existing ride.

To the OP- you're not alone.

[aniketi]

Some cars are overpriced and some are not. Examples - i20 was about 7 Lac 10 years ago and now it's 13 Lac!! Innova is another example, now base variant only starts for 23 Lac OTR !! Endeavor, Fortuner are also too much costly now over years. Not sue why so much increase in price in last few years for these cars.

Now take example of Wagon R. Now top end costs 7 Lac OTR which is not much increase in last few years. I guess prices has gone up in parallel with inflation. Tiago is other example, price increase is normal. Similarly Ertiga top end costs around 12 Lac OTR which is normal increase in price over last 7-8 years.

So mainly, some companies, some models are looting people and over pricing their cars. Not all cars are overpriced over years. Companies are adding some fancy features and on basis of that they are overcharging people, not a good practice for sure.

All high end cars are costlier like anything now in past few years. Now big 3 range starts from 50 Lac only!

[sanchari]

Taxes have remained the same for the last few years. When GST was brought in, rates were set to what the combination of pre-GST rates were (VAT, state taxes etc). So in that sense, taxes haven't increased a lot, and aren't the cause of price hikes. Taxes have remained with 1-2% change over last 7-8 years, but prices have moved up by almost 30-50% over the same period.

Change to BS-6 was a reason for many companies to increase their cost, whether they really had to invest that much or not. Just a reason to increase cost. In between, there has been multiple hikes saying its due to increased input costs.

While taxes are good portion of the prices we pay to cars, the increase in car prices is mainly due to base increases by manufacturers. And as taxes are a percentage of base price, taxes increase as base price increases. If one wants to compare prices of cars with say, US (which has very less taxes on vehicles), one should compare the ex-showroom prices with the base prices in US. When I had compared some prices few years back, even the base price of car here seemed a bit higher compared to US, inspite of higher labour and regulatory cost in US compared to India.

Manufacturers try to charge the maximum they think customers can pay, and its independent of the input cost.

[vitesh.b]

First
GST on most of the bigger cars GST + Compensation Cess is 48%
That's the main reason why cars seem overpriced, most of the comparable world has VAT at around 20%...
US even at 0% (if am not wrong).

Net net for a 20 lac car, if we had tax parity at around 20%, this would have been 20/1.48x1.2 = 16.2 lacs - that's a roughly 25% markup that goes into filling he government coffers.

Plus the enormous registration tax on top !

Second
Most cars that are not Maruti and are not compromising on quality (and on the contrary are getting world parity featured - stability control, 6 air bags, infotainment systems, digital displays, sunroofs, alloys etc.to name a few) to maintain price parity and also rely directly and indirectly on import of parts and also on raw materials which are pegged with EUR / USD.
in 2010 EUR was 65 INR now its at 88 --> +35%
in 2010 USD was 45 and now its 75 --> +66%

Third
Cost of doing business in India: the invest needed for model and the volume per model that every new entrant forecasted and what they actually got as volumes are a big mismatch.
Obviously, exceptions for rule 2 exist: namely Hyundai, MSIL, Kia and Tata (off late)... and maybe handful of models outside these manufacturers.
Net net Indian auto industry which was touted to be the next China in mid / late 2000's never came true.