[84.monsoon]

I think we are seeing a change where cars are becoming closer to a gadget (somewhat similar to a smartphone) that someone changes every few years for the "novelty factor", from being a important "milestone asset" whose purchase marks a key transition in one's life.

Let me explain - previously, one bought a car at key points in life - getting a new job (or a significantly higher paying job), getting married, having a first kid (or a second one), becoming an empty nester etc.

When you are a buyer who is buying as in this case, you want the right product to fit your functional needs - space, practicality etc. One is not going to be swayed by the exact price, one is more looking at wider price bands to short-list cars. The decision is driven through careful analysis of space, comfort, etc. and while price does paly a part, it is not the most significant, as you are buying the car with a view to keep it for a long time (till your next lifecycle event). You are not likely to be swayed as much by a new launch or a low launch price, as your decision making has a longer-term view.

Nowadays, many young people are buying cars as though it is another gadget, The objective is often the novelty factor, make a splash on their social channels, experience a new form factor (e.g. trying out an SUV after having had a sedan) or to experience a new level of power & performance. There is no immediate functional use for many of the specific features that exact car model, it is just that it is cool and new and personifies me and so I buy it. I met many young Thar buyers who bought it not because they wanted to go off-roading or run a farm, but because they thought it was a cool car to own and show-off to their family and friends.

For this lot, the purchase process and decision is similar to the way they have been buying smartphones etc. over the last few years. The novelty factor is paramount, and splashy new launches and big headlines about attention-grabbing prices sway the buyers a lot. Car companies are on to this new segment and the change in their buyer behavior and are slowly acting like Mi and Realme, trying to hold big launch events, push introductory pricings, etc. No one questions Samsung when they have a pre-launch price or freebie for the flagship phone that is not available once the phone launches.

[Early_Adopter]

My perspective is, the practice adopted by the OEM's is based on simple economic principles of maximising the profitability based on willing to pay (WTP).

By announcing aggressive introductory price, the OEMs will get to know the demand well in advance, with reasonable certainty, through these bookings.

We all know not every booking will get converted into an eventual sale. The OEMs have access to advanced tools and sophisticated algorithms to smartly estimate the actual conversions based on the initial bookings.

They then, keep increasing the price by 1 to 2% every 6 to 8 weeks. For each increase in price, some customers do drop off, but some others will stay on.

Eventually, only some customers will reap the benefit of introductory price and, after that, the company gets to make extra profit for each instance of price increase. This way, the manufacturers end up making little bit more profit from each customer, as the price keeps going up.

This also helps them to forecast their manufacturing plans and optimise their capacity utilisation. They can tweak the assembly line to produce more of higher variants (aka more profitability) compared to base variants (lesser profitability).

So, from the point of view of the OEM, it is economic principles of (1) maximising the profitability (2) optimising the capacity utilisation (3) advanced planning of which variants to produce (4) optimising the distribution channels / geographies well.

Eventually, as several BHP'ians mentioned, it is the customer that decides the success or failure of a model at a particular price point and historically, we all look for Value for Money (VFM) in the product offering. If the product meets the VFM perception, the OEMs will certainly end up optimally utilise the available resources and at the same time, laugh their way to the bank until the next launch.

[narayans80]

I own a launch disaster, So I very much understand why OEMs go this route.

Paying for a car is not something you are forced to do. I know several instances, where customers cancel bookings after the car arrives at the yard.

If 29000 out of 30000 customers cancel their bookings citing the price increase. Will the dealer and OEM still keep their stance? The answer is obvious. The reason OEM and dealer pull such shenanigans with temerity is because customer allow them to.

Besides these are products where not everyone pays the same price, and depends on deal one strikes. Not all of us are good at negotiating.

Leave aside introductory prices, see what Innova is doing successfully over the last decade and change with Innova and Fortuner.

[SinghShu]

Yes, such shenanigans exist because we let them. While we may crib and discuss here all day, when it comes to actually taking the purchase decision, these 50-60k hikes don’t matter.
And few of the reasons are:
1. By that time we are already so invested in the product, with all the research, test drives, mental images and what not that this hike doesn’t seem much. More so, investing same amount of time and efforts on another product seems like an extensive exercise.

2. We tend to see the hike in relative terms. So a 50k increase on a say, 16 lakhs ex-show price car is 3.xx% increase which we are fine to live with when it comes to actual reality.

I have seen friends and family members cancelling their bookings, but not once the reason has been a price increase.

[Vasuki]

Originally Posted by ashis89

I book a car today by paying a nominal amount. Let's say the on-road price is 10L and the waiting period is a few weeks/months. Now some questions that come to my mind:


Do I have to pay for the car in full, while waiting? No

Is it possible to make full payment so as to have price protection?

Some superbike dealers used to follow this practice. Is this practice prevalent in our car segment?

[ashis89]

Originally Posted by Vasuki

Is it possible to make full payment so as to have price protection?

Some superbike dealers used to follow this practice. Is this practice prevalent in our car segment?

This is not a prevalent practice in this industry. However, if you offer to pay in full, some dealers are known to go out of the way to arrange the car ASAP without much waiting. As such, the buyer pays the current price and gets the car too. Again, this is an informal agreement with the dealer.

[PhiGolden]

Now there is a change.org petition on this. Those who want to support the cause can use the below link.

https://chng.it/kLqXzv9rkX

[ValarMorghulis]

Originally Posted by ashis89

...As such, the buyer pays the current price and gets the car too. Again, this is an informal agreement with the dealer.

Originally Posted by Vasuki

...Is this practice prevalent in our car segment?

Don't know about industry practice but I paid for my Venue in full and received it without any price increase in 2019 (albeit there were no price increases on the horizon at that time. I did receive it a couple of weeks late)

Originally Posted by PhiGolden

Now there is a change.org petition on this. Those who want to support the cause can use the below link.

https://chng.it/kLqXzv9rkX

change.org petitions are as useful as "ay" in "okay"

[Nitrous Power]

Originally Posted by solaris007

In which other market can sellers get away with such shady tactics?

It is not a shady tactics at all. Free market detects the pricing. Buyer is made aware that introductory price is at given time point and actual price at delivery may vary. That is not shady tactic. Buyer is booking the car with that condition in mind and should be ready to cancel the booking if the price have shot up at the time of delivery.

Will give you example of what happened here in USA at the launch time of Toyota Supra couple years ago. Rumors were that it will come out at USD$55k. Bookings were taken and car was launched with ~45K starting price. However, dealers were greedy and they started marking up the prices to $75,000 (you read it right - $30,000 over MSRP) and few people paid (who wanted badly). I backed out and cancelled my booking as it would be foolish to pay that much of money.

However, that is perfectly fine as market detects the pricing and I was told clearly at the time of booking that prices will vary and will be decided at the time of car availability.

[ashutoshb]

Originally Posted by ashutoshb

I had booked an MG Astor Style (base) variant on Jan 6th, 2022.

The tentative delivery on their app is showing Q2 2023.

I was told that if I upgraded to a higher variant, I will get the car earlier. But, since, I was in no hurry, I stuck to the base variant. I was hoping that once the semiconductor situation improves, I might get it sooner.

But, MG's strategy looks simple. A bargain launch price for the base variant to attract customers, then use all possible means to convert the sales for the higher variants.

Now, my fear is, by the time I get the car, it might not remain a value for money car, as it originally was.

Here is, MG India President promising Astor deliveries within 2-6 months.

I still have an expected delivery after a year. Is this not a deliberate delay, then?

Why the step motherly treatment for base variants? We already know the answer to that.