[AKB]

Wanted to share a unique trend I am witnessing in Indian market currently

How cars across segments are challenging each other and cheaper cars (relatively) are coming out better!!! This was not the case till about 18 months back.

Please see the comparison of XUV700AX7L vs Kodiaq L&K vs BMW X3.https://www.carwale.com/compare-cars...2=9303&c3=9437

1. The price difference amongst all three cars/automobiles is 20-25L.
2. All three have comparable power (200-250BHP) and performance
3. Size and stance is more of less comparable. We can always argue that XUV700 is over designed (like all M&M, expect Thar), Skoda is understated, estate like and X3 is Classic. However, there is nothing wrong with either of the styles
4. Surprisingly, the cheapest has most features. XUV has ADAS, Adaptive Cruise Control that other two don't get.

Questions that arise are:

1. Are we seeing a point of inflection where brand and build quality matter but don't matter enough to pay 20/45L extra
2. The M&M and Tata's will become segments leaders and will bring masses to 20-30L segment.
3. Hopefully arrogance of supposedly high-end manufacturer will reduce

[Sarath_]

If Force motors were to come up with a 20-25L SUV using their engine expertise and source components for other items then they would in reality end up making a car that beats all the cars you mentioned

Also I feel Innova beats all three of the cars mentioned albeit in different aspects than one would imagine.

[CarNerd]

Originally Posted by AKB

Questions that arise are:
1. Are we seeing a point of inflection where brand and build quality matter but don't matter enough to pay 20/45L extra

Brand and Build Quality matters and People are ready to pay extra for the Status that comes with a particular Brand. If not, Rolls-Royce, Bentley, Porsche, Ferrari, etc wouldn't be Profitable. This applies to all segments like Clothing, Electronics, etc.

Originally Posted by AKB

2. The M&M and Tata's will become segments leaders and will bring masses to 20-30L segment.

That is because of Inflation. What used to be a 5-6 lakh car 15 years ago is now around 10-12 lakhs. A Mercedes Benz S-Class used to cost around 75 lakh in 2007, It's now about 1.7 Crore.

Originally Posted by AKB

3. Hopefully arrogance of supposedly high-end manufacturer will reduce

It's not Arrogance, it's Business. They have built their brands over the years and they have positioned themselves above the others. The concept of One size fits all doesn't work here. When companies think that they don't need to change because they are segment leaders, that is being arrogant. There are mass market leaders like Hero, Maruti, etc who are very slow in introducing new technologies because they are the leaders!

The thing which every business should concentrate is on Customer Delight. That would differentiate a good company from a great one.

[Kosfactor]

The formula is premium features & performance from a few segments above at an affordable price. This worked then in 2011 and it worked plentiful this time around as well. XUV7OO has received ~ 100,000 bookings.

Even in terms of Safety while XUV5OO received ANCAP 4 star rating in 2012, it did not create a considerable demand for 4 or 5 star rated vehicles in India for most part of the decade afterwards.

I do not think XUV reflects the general attitude of Indian auto sector, it certainly shows the capability of Indian auto sector.

Unfortunately the situation appears that there is demand for a vehicle like XUV which punches above its weight class but the customers appear to want XUV itself for the most part and nothing else.

[GTO]

I have always maintained that no one needs to spend over 20 - 30 lakhs on a car, no matter what your requirement. Anything over that is an entirely discretionary spend driven mainly by desire. Not just today, but in the last 5 years, we have seen some pretty darn competitive cars under 30 lakhs. Be it the 138 BHP Creta that is fast + dynamically sorted + loaded with kit, Innova Crysta (especially in the 2.8L AT guise), Hexa, 5th-gen Honda City (more comfy than a C-Class), XUV700 (Mahindra hit it out of the park), MG ZS EV & Astor, Skoda Octavia (killer car), Kia Carnival etc.

You can now get seriously good machinery for 20 - 30 lakhs. This wasn't the case a decade ago where choices were limited, all the action was <15-lakhs and the SUV / Crossover boom was just about to begin.

Originally Posted by Sarath_

If Force motors were to come up with a 20-25L SUV using their engine expertise and source components for other items then they would in reality end up making a car that beats all the cars you mentioned

In their dreams, frankly. Mahindra would've spent R&D money on the XUV700 that would exceed Force Motors' 20-year development budget. Force doesn't have the capability to build a world-class SUV / Crossover for 25-lakhs. Period.

[Shreyans_Jain]

Law of diminishing returns is catching up in the premium end of the Indian car market. On one hand, cars in the 18-30L rupee segment have upped their game spectacularly. Be it design or build quality or powertrains or features, car makers lead by our desi duo have pushed boundaries. They have even learnt how to develop sorted suspension setups, a most difficult thing to accomplish.

On the other hand, premium segment cars have seen their prices increase exponentially, but changes to their products have been evolutionary at best. Take a 3 series of today, and a 3 series of 8 years ago. They look similar, feel similar, drive similar, have similar powertrains. The same 2 liter diesel. You’ll get things like bigger screens and Android Auto and digital instrument cluster and fancy new headlamps….. all incremental upgrades. The cost of the car has more than doubled. Ditto for the 5. Then there are brands like Audi, whose apple cart has actually rolled backwards.

Net net, between massive improvements in the sub 30L cars and relative stagnation in the segment above it, any decision to spend the extra cash is effectively based only on brand perception and personal choice. Car for car, the premium is no longer justified.

[yogishkamath]

Originally Posted by AKB

1. Are we seeing a point of inflection where brand and build quality matter but don't matter enough to pay 20/45L extra

There will always be a (relatively small but significant) segment of discerning buyers who have the means and the desire to spend the extra money.

Yes, the XUV is sold out for 18 months but the Skoda Kodiaq is also sold out for the rest of the year.

[PrideRed]

A brand is not built overnight and there is always a premium charged by the manufacturer who will cash in on all the hardwork they put in building the brand. A Burberry shirt may not be able to to justify the premium pricing without the tag, an iPhone 13 may not be worth the premium for many. Beyond certain level, brand value plays a big role in pricing. Auto industry is not very different. Whether brand matters is a different discussion altogether but is important factor for majority of the buyers. May be years down the line we may see a Mahindra or Tata selling with a price tag of say VW/Toyota but that will need lot of effort to make a desirable brand.

[sunikkat]

Brand value plays a big role for many people as they go up in their life cycle. It’s not only in cars but in almost every thing. Take example of clothing - a brand like Levis offers almost everything in casual clothing with good quality too. But still there is a good demand for high end brands like Emporio Armani, Gucci etc. Now only differentiator between these are the brand value.
So when people grow in their life stages, the brand value plays a major role and when they have a budget of 50 lakhs wouldn’t think of Mahindra against the available options, though Mahindra might be providing more features, similar powertrain etc. The differentiator will be the luxury quotient which will be clearly visible too - say XUV700 vs Kodiaq vs X3.

PS: I am not generalising here and there will be many people who can easily afford many high end brands but prefer the ones that offer value.
Also I personally feel, in today’s scenario, any car above 10 lakhs is not a want but desire (as GTO mentioned in previous post). And this will be different for different people - for few even car itself is a desire

[JoshMachine]

The delta between the car engineering/technology of yesteryears (say 10-15 years ago) vis-a-vis today has vastly eroded. However, what seems to be interesting is that the delta between customer choices has widened almost inversely in the same time duration.

Till about 10-15 years ago, customer segments were not defined that much and it was kind of obvious that certain categories of customers will buy (or rather, aspire for) only a specific type of car.
But today, the customer has literally everything at his/her disposal - ever-burgeoning finance options + disposable incomes + technology reach-out community forums etc.
This abundance is giving the option to the customer to choose very carefully and literally dump those options that are not favourable.
This selection of each & every aspect on part of the customer, has made the manufacturers to respond accordingly and they have no option but to provide a range of brand & build quality that caters to all and sundry.

In the process, manufacturers who were at the 'lower end of the pyramid' earlier but have now progressed by leaps & bounds, are doing very well and those who have grown only incrementally, are struggling to create new customer bases, even losing out in some cases.

[Sarath_]

Originally Posted by GTO

In their dreams, frankly. Mahindra would've spent R&D money on the XUV700 that would exceed Force Motors' 20-year development budget. Force doesn't have the capability to build a world-class SUV / Crossover for 25-lakhs. Period.

Force motors already has the blueprints for BMW, Mercedes and has the technical expertise to manufacture engines. I mean if they are able to achieve the tolerances required by them then they are inadvertently the best engine manufacturers in the country.

Of course I realize, it seems I am suggesting they copy or plagiarize the blueprints, which they won't because of non-compete handshake agreements like ARM for chip designs. But they could at least try to make an indigenous Made in India engine with "inspirations" which will be world class given they already do that.

They can go the Fiat 2.0 multijet diesel engine route if they don't want to build the entire car and slowly build up

Some excerpts from their website https://www.forcemotors.com/excellence

Till date, Force Motors has supplied over 1,15,000 engines and over 1,00,000 axles for Mercedes Benz India. This portfolio has grown to include the front and rear axles of the C, E, S class passenger cars and GL Class SUVs. This includes the 4 cylinder gasoline and diesel engines, 6 cylinder V-type gasoline and diesel engines, powering the complete range of Cars and SUVs made by Mercedes Benz India.
In 2015, BMW assigned Force Motors to produce and test the engines for all cars and SUVs to be made in India. Force Motors set up a dedicated state of the art facility in Chennai close to the BMW factory to produce and supply engines for their 3, 5, 7, GT series cars and X1, X3, X5 series SUVs made in India. Till date Force Motors has supplied over 44,000 engines to BMW.

[tiagoatrix]

I think we should thank thank the Duster /creta /Xuv700 for the fierce 15-30L market, they were the ones who started giving big cars for the masses,a decade back that was a change in trend from swifts, dzire, i10s( sub 4m cars).

As a result, market share of these so called SUV's kept rising YOY, now its close to 40%, Soon one out of two cars sold will be a cross over.

For 20 L, will I be able to buy a perfect car? I don't think so. Creta's top end OTR is about 22L,it doesn't offer the space as Hector, Hector doesn't offer Diesel auto /Petrol DCT, XUV, 700 @ will come with half the features of creta, Harrier quality is questionable at 24/25 L OTR. Maybe XUV 700 Top end is a perfect car, but at 28L OTR,its a first time for Mahindra (not accounting Alturas neglible numbers).

There's something for everyone in that price range for the not not so brand loving people.

But,a well paid surgeon Working with a Corporate hospital in a metro will have his/her eyes on Merc/BMW, not Hyundai /Mahindra.

A wealthy Politician will never choose a Marazzo over fortuner.

[landcruiser123]

Sign of a maturing market.

In the USA, the sedans like the Toyota Avalon (full-size - one level above the Camry) has been a luxurious barge. Anyone could mistake the car for a Lexus in blindfold test. The humble Camry is closer to a Lexus than the mass-market Toyota the previous gen Camrys were. The cars with a premium moniker are no longer significantly better engineered (except Maybe BMW) than their cheaper cousins. Of course, badge value still has it's place in our society.

On that topic, I feel Toyota should have significantly differentiated ZX variant of the Innova. I can't count the number of people who loved the Innova(more than the Fortuner or Endeavour), but rejected it due to the 'taxi image.'

[charanreddy]

Originally Posted by AKB

Wanted to share a unique trend I am witnessing in Indian market currently

…

1. Are we seeing a point of inflection where brand and build quality matter but don't matter enough to pay 20/45L extra
2. The M&M and Tata's will become segments leaders and will bring masses to 20-30L segment.
3. Hopefully arrogance of supposedly high-end manufacturer will reduce

I completely agree. The above trend is democratising the availability of competent cars, that are safe, well designed, loaded with comforts to consumers who no longer need to pay the ‘brand’ premium. XUV700 is a great example. So is the Thar. Not necessarily cheap, but customers desiring to buy cars of international quality need not spend the cost of a small house in a city to get it. the luxury brands of the world will increasingly find it difficult to sell over priced, cramped, under powered basic cars as the competency of the local / lesser known manufacturers increase.

At this point in time I would gladly buy a XUV 700 if I had a budget upto 40 lakhs. Hypothetically, Only if I had a 70 lakh rupee budget which I don’t mind loosing in the next few years as depreciation, I would look at Merc, BMW and Audi. A lot of our aspiring higher middle class with more disposable incomes would not be willing to take this hit if a similar option was available at much cheaper price. Hence the huge success and demand for cars like the Thar and XUV700.

[justwheels]

I think what is important to see is which vantage point you are seeing this from?
Like most of us who came from middle class and cars have been a luxury, as we start to afford 20 to 30 lakh cars, the aspiration and feature value grows a lot. We always compare it with the premium luxury segment as it satiates the desire to own premium features and in this case surpass what higher segment offers.
However if you look top bottom vantage point for someone happily able to afford a luxury brand, that person doesn't even care (in most cases, tbhpians aside) about difference of features. A customer looking to buy an X3, will never even go to a Mahindra showroom and compare. He or she might go to Lexus showroom to check not go below the line. For them, Alcantara leather or customized wood funish values more than the ADAS feature of the XUV.

Ofcourse the overlapping segments will see some cross shopping. But people have and will always put more money to a brand value than functional value. As they say, you dont really need so many features to go from point A to point B.