[adasisthefuture]

On a detailed analysis of Volvo's pricing of the vehicles it is selling in India with that of the U.S. market, it appears that Volvo has overpriced its SUVs in India compared to the Sedans.

The above can be verified by the price range in which Volvo has put its different vehicles in the US market compared to Indian Market. Volvo's prices can be verified on the following links:

https://www.volvocars.com/in/ (For Indian Prices)

https://www.volvocars.com/us/ (For US Prices)

Volvo sells three ranges of cars in India - the 40 Series, the 60 Series and the Flagship 90 series. Its SUV lineup begins with 'XC' and the sedans begin with 'S'

In India, Volvo sells XC40 at 46,40,000/- ex-showroom. Just before it was discontinued, Volvo's S60 sedan was also priced similarly at 45,90,000/-. It is pertinent to note here that in the US, the MSRP of XC40 is $36,350 while that of the S60 is $41300 i.e. the S60 is costlier by $5000 in the US while in India there is hardly any difference.

Further, in India, the price of Volvo's Flagship sedan S90 and that of Volvo's mid-range SUV - the XC60 (not a flagship) is quite similar i.e. 67,90,000/- for the S90 and 67,50,000/- for the XC60. Contrary to this, in the US, MSRP of the S90 Sedan starts at $57,000 while that of the mid-range XC60 SUV is only $43,450 i.e. a difference of a whopping $14000 between the two. Interestingly, the S60 Sedan and the XC60 SUV are priced very similarly in the US while Volvo has highly overpriced the XC60 SUV in India by bringing its ex-showroom price almost at an equal level (only Rs.50,000/- less) to their Flagship Sedan- the S90.

Further, the MSRP of Volvo's Flagship SUV - the XC90 starts at $56000 (shockingly $1000 cheaper than the Flagship Sedan S90) while the difference in pricing between the two flagships in India is a whopping Rs.30 Lacs (XC90's ex-showroom price in India is 98,50,000/- while that of S90 is 67,90,000).

Of course, there are various trims on the above models which affect the pricing however, under no circumstances there can be such a humongous difference in their price positioning in the US and in India. It is also pertinent to note that none of the models I have analyzed above is a CBU so as to justify that one model is costlier in India due to taxes levied being fully imported while the other is a CKD and so on.

From the above analysis, it appears that looking at the craze of SUVs in India, Volvo has overpriced its SUV range highly in India compared to the Sedans which are not in fashion these days. However, if that is the case, it is certainly highly unethical for a reputed Company like Volvo to do so.

I would request learned members in this forum to share their views on the reasons for such disparity in pricing of the different models and in case it is concluded that Volvo is really overpricing its SUV range in India, whether it is prudent for Indian car buyers to buy the SUV range of Volvo at a premium of 20 to 30 lacs rupees and whether going for a Volvo Sedan priced fairly makes more sense.

I have not found any discussion on this issue, subject to correction, anywhere on the internet and therefore I am posting it in this forum for consideration of learned members of this esteemed forum.

[V.Narayan]

Permit me to offer a counter point of view here.

Too often I hear this lament on Team BHP of a car being over priced. Over priced compared to what - usually compared to our pockets and the mismatch between our desire and our financial ability. This mentality of overpriced is a hangover from our license raj-socialist days where the bureaucrats wanted to control what we produced, how much we produced and what price we sold it for but took no ownership of the fact that as a consequence companies went sick and the economy failed to grow in a healthy fashion.

USA and India are two different markets with differing tax structures, distribution costs and overheads and most importantly volumes. It is only natural that a seller will try and place a premium price on a hot selling product and a discount on the slower selling one. That is how markets work and OEMs/Entrepreneurs make it worth their while to even stay in business.

A seller is free to sell at a price he/she wishes to. A buyer is free to buy at a price point that he/she wishes to. When the two sets intersect a deal occurs. I wish to holiday in Oberoi's Udai Vilas property but cannot afford the price so I announce it is overpriced!!! That is what happens often on Team BHP.

Overpriced is a notion always relative to our pockets. But there is some buyer out there for whom the price is okay and that is why the product sells.

[Hayek]

Originally Posted by adasisthefuture

Ofcourse, there are various trims on the above models which affect the pricing however, under no circumstances there can be such a humongerious difference in their price positioning in the US and in India.

…share their views on the reasons of such disparity in pricing of the different models and in case it is concluded that Volvo is really overpricing its SUV range in India, whether it is prudent for Indian car buyers to buy the SUV range of Volvo at a premium of 20 to 30 lacs rupees and whether going for a Volvo Sedan priced fairly makes more sense.

Comparing car models sold in different markets is a mug’s game - for India vs the US, the emission norms, power trains on offer, interior trims, other features that you can option elsewhere and taxes vary widely. Ultimately, any manufacturer charges what the market will bear, and price relative to competition. So prices for even identical products can be very different - and comparing prices between the entry level variant of a car in the US with the trim sold in India makes even less sense.

On the premium for a SUV vs a Sedan of similar size, that is a call for you to take. I happily bought an X3 for roughly the same price as a 5 series, because I valued the higher ground clearance, high seating, the greater knee room and better boot space in the X3 - a friend who was buying at the same time bought the 5 series since he valued under-thigh support and the more comfortable rear seat of the 5 vs the narrower squab of the X3. Drive both and decide based on options available to you, don’t waste your energy on what a car sells for anywhere else in the world.

[Nilesh5417]

Originally Posted by adasisthefuture

On a detailed analysis of Volvo's pricing of the vehicles it is selling in India with that of the U.S. market, it appears that Volvo has overpriced its SUVs in India compared to the Sedans.
.

What you've spotted is true but not necessarily surprising. Most other manufacturers present in both markets more or less must be already doing so.

Also, i echo what other members state - car makers position and price their offerings considering the local regulations, market preferences/ size of the market and their own setup locally. Infact that's what all companies across industries do not just car makers.

[lapis_lazuli]

I think the OP had a completely different pov. In my opinion he meant that the pricing differential between the corresponding sedan variant and SUV variant is more in US than in India. In USA the segment SUV is lesser in price than the sedan than in India and that's what's probably making him question. Not the absolute affordability part.

[androdev]

Your observation is correct and it's a great method to understand which offering is VFM in our country. Indian customers are willing to pay a huge premium for ground clearance (SUV), fuel economy (diesel, disrupted by recent regulatory risks) and reliability(Toyota), etc. and most companies tweak their prices to take advantage of these market preferences.

You can't blame a company for their pricing strategy or call it unethical. Why are you expecting them to sell with a consistent "cost + fixed margin" formula across markets and segments? Apple sells their watch products at a price similar to their entry level laptops - just incredible, but they are able to sell and people are buying.

My suggestion is to use this global price benchmarking info to find a VFM product and see if your requirements are met by any of these VFM products. Many people bought Hyundai Ioniq because it's seen as VFM in India when compared to other markets. No point complaining that Fortuner is not VFM in India if that's the only car you want to buy.

[Guna]

Originally Posted by V.Narayan

Permit me to offer a counter point of view here.

Too often I hear this lament on Team BHP of a car being over priced. Over priced compared to what - usually compared to our pockets and the mismatch between our desire and our financial ability.

OP is specifically comparing how their SUVs are priced relatively higher than their sedans which is the opposite in USA.

[DicKy]

Is it anything to do with how SUVs, or rather high ground clearance is taxed more in India, while SUVs/trucks (does the smaller Volvo SUVs come under trucks?) in USA exceeding a specific weight limit has tax exemptions?

[GTO]

Originally Posted by adasisthefuture

I would request learned members in this forum to share their views on the reasons of such disparity in pricing of the different models and in case it is concluded that Volvo is really overpricing its SUV range in India, whether it is prudent for Indian car buyers to buy the SUV range of Volvo at a premium of 20 to 30 lacs rupees and whether going for a Volvo Sedan priced fairly makes more sense.

Make money on what sells & try to competitively price the ones that don't sell. A handful of cars in India are sold at near cost just for presence and / or market-share.

Originally Posted by V.Narayan

Too often I hear this lament on Team BHP of a car being over priced. Over priced compared to what - usually compared to our pockets and the mismatch between our desire and our financial ability.

I wish to holiday in Oberoi's Udai Vilas property but cannot afford the price so I announce it is overpriced!!! That is what happens often on Team BHP.

I usually agree with your posts, V.Narayan, but you missed the point here.

- OP is stating that the % difference between Volvo SUVs (USA and India) is far greater than the % difference for its sedans (USA and India).

- Affordability has absolutely nothing to do with comments on Team-BHP that call a product "overpriced". I can buy the C5 Aircross, but still insist that it's a grossly overpriced product (seems the market agrees with me too). I could also buy other cars like the Mobilio, Meridian, Kushaq 1.5 etc. but have called them out for being overpriced. Seems the market has agreed with me on all of these too.

You are mixing up what one can afford, with what one deems overpriced.

[avira_tk]

I think we're going overboard comparing prices in the US, the biggest market, versus a rounding error place like India. People aren't paying for any sedans here and the market is dying, while any suv is at a premium. No company should pass up a profitable sale, that's the only ethical thing to do.

The xc series is expensive because it's desirable. If I was shopping for a luxury suv the XC60 would be on top of my consideration list, at the same time, if I was planning on a sedan, the S60 / S90 won't be in consideration. Volvo has figured this out and charges accordingly.

The US also has a system of dealer makeups, so list price can be jacked up by 200% without any restrictions. The average selling price is what matters, not the bait pricing used for generating footfall.

[ABHI_1512]

Don’t know about Volvo, but there are many examples of cars being overpriced in India. Some tanked without a trace and some continue to be successful.

Cars like Ford Fiesta, Toyota Yaaris come to the mind immediately when discussing cars which were overpriced and which flopped despite being competent products. People rejected those cars not because they couldn’t afford them but simply because they didn’t find the money’s worth when other manufacturers were providing better.

Some cars like Toyota Fortuner or a Jeep Compass are overpriced now but their manufacturers know that they can get away with it since there is not much competition or options in those particular segments. Jeep though has got cars in the segment of Compass now and that has resulted in sales being affected.

A classic case which the members might recall is the reduction in prices of Ford Ecosport as soon as the launch of Suzuki Brezza was announced. Ford reduced the prices to the tune of 1 lac which proved that they were just minting money from the segment first car. Manufactures will price their cars according to their fancy, but to not question the overpriced cars and to attribute it to affordability is something I don’t agree with.

GTO has right pointed out the same in the post above.

[adasisthefuture]

I think by no standard or calculation, it is justifiable that an XUV (Volvo XC90) whose MSRP is $1000 lesser than the Sedan (S90) in the US is costlier by $36,000 in India (Rs.30 lacs). It is a clear case of profiteering.

[Nithesh_M]

The notion that people who bring up the term "overpriced" are poor and of "socialist mentality" is a bit far fetched. Even a crorepati in the country will be spotted driving to a public market in a Porsche 911 targa top and haggling down the price of fruits and vegetables with his or her spouse (Happens outside my office everyday hence the exact car model reference). Doesn't mean they cannot afford the price of vegetables. When they say its overpriced they mean compared to other places nearby for the same veggies or fruits. Or maybe they're comparing it to prices from just a day before.

Heck we've seen very rich people on this very forum scouting the luxury car segment price thread to see how much discounts are offered or can be haggled in what dealership to a tune of upto 20% on original sticker price. That doesn't mean they couldn't afford the original sticker price. They know the manufacturer is trying to upsell the product and has a huge profit margin per model. Its just the case of customers being smart about their money.

If anything this shows the capitalist mentality of the car maker who will sell cars(with way more features) in the developed nations at cost to produce or even at a loss just to stay afloat in that market and then trying to make up for that loss from underdeveloped countries by overcharging customers there who may not mind paying more than its worth to have some level of exclusivity. Basically make more money from the poor countries to fill the rich country buyers pockets and keep your business afloat there.

While there is nothing wrong with car manufacturers subsidizing cars for developed countries and making up that subsidy from underdeveloped countries as they are free to do so, there's no harm in OP asking why this happens. The underdeveloped countries could benefit from more such smart customers who know these things.

I also think the US pricing difference on sedan and SUVs could be due to differences in demand being more for one over the other in different markets.

[Guna]

Originally Posted by adasisthefuture

I think by no standard or calculation, it is justifiable that an XUV (Volvo XC90) whose MSRP is $1000 lesser than the Sedan (S90) in the US is costlier by $36,000 in India (Rs.30 lacs). It is a clear case of profiteering.

I am surprised that an SUV costs less than an equivalent sedan in USA. SUVs use more material, have additional features like AWD/extra row of seats and I believe that the rear hatches on SUVs are expensive to produce than the boots on sedans. It may be a case of overpricing sedans in USA

[adasisthefuture]

Originally Posted by Guna

I am surprised that an SUV costs less than an equivalent sedan in USA. SUVs use more material, have additional features like AWD/extra row of seats and I believe that the rear hatches on SUVs are expensive to produce than the boots on sedans. It may be a case of overpricing sedans in USA

As I mentioned in my earlier posts, difference between S90 and its counterpart SUV - the XC90 is Rs.30 lacs ex-showroom in India i.e $35000 roughly while both are priced similarly in the US. Do you really think Sedans which are going out of fashion in the USA as well would be overpriced by Volvo to this extent ? Considering current trends of preference for an SUV over the Sedans, it is quite unlikely that a company would overprice a low selling product. You may have a look at the following link wherein Volvo has published its sales figures from which it is amply clear that their Sedans are much less in demand. In such a scenario, it is highly unlikely that Volvo would overprice its Sedans.

https://www.media.volvocars.com/glob.../sales-volumes