[dharmana]

Originally Posted by smartcat

There are places where you can go to get luxury or sporty cars at low prices by avoiding paying duties. And it is completely legal too.

That is, you can get a Civic for 8 lacs, BMW 3 series for 15 lacs, CRV for 12 lacs and Accord for 10 lacs. So basically, you don't need to be 50 years old to enjoy these cars now.
Hint: Team-BHP Classifieds!

If you are referring to USA, i wouldn't migrate there to be able to afford and drive these cars. Rather focus and see how we can make those cars affordable to the not so rich driving enthusiasts in this country

Originally Posted by Nitrous Power

This topic has been discussed to death in various other threads.

@dharmana, Honda manufactures its entire range but the CRV. Higher import duties serves multiple purposes. First, it pushes the manufacturer to set up manufacturing plant if they want higher sales volumes at the same time creating employments in the country. At the same time, it provides the home grown companies time to catch up with international brands.

.

I don't think honda manufactures their entire range except for CRV here. If they did that, they would be much cheaper. Rather they might be importing the parts and assembling them in their Indian plants as CKD which does not bring down the price much

Originally Posted by blackasta

+1 to that
Nope - Honda has a plant in Noida - and manufactures the all of their cars except CRV there.
Absolutely true

Maybe they are not importing as CBU but i don't think they are really manufacturing the engine, parts etc here in India. I think Honda is importing the parts and assembling them through CKD route and since duty in CKD is also quite high, the cars like Civics, accords etc are still expensive

[Nitrous Power]

Originally Posted by dharmana

I don't think honda manufactures their entire range except for CRV here. If they did that, they would be much cheaper. Rather they might be importing the parts and assembling them in their Indian plants as CKD which does not bring down the price much

I understand that Honda does not manufacture all parts in India but if you see the numbers provided by blackasta, the localization of Civic and City is around 75%.

[raul]

Let's not talk about rich or poor here, that's a red herring, and is not the issue. Why have cars then, let's all be poor. There are many parts of India, the rich and middle class are as representative of India as the poor.

Just because India is poor does not mean we cannot have anti-competitive laws or its ok for folks to be ripped off. The issue of the poor can be addressed and should be without raising it at any given context for instance when talking about duties on cars? How does that help the poor exactly. Its not an either or, it never is.

If car makers want to profiteer in India and charge more than western countries lets talk about them paying their labour more as they do in the west, will they be doing that and increasing income levels and demand and growth in this economy? I don't think so, will the builders who charge atrocious rates for the flats be paying their labour more or treat them better? The same for infrastructure projects? That's what will help the poor. Here we have the paradoxical situation of low incomes and high prices which just widens the gap between the rich and poor, and reduces demand in the economy,.

The issue here is being ripped off, even in the UK they call it 'Rip off Britain' because of the price differential between USA and the UK.

The simple fact is we are being ripped off and this is a tired topic, let's evaluate all the arguments:

- Volumes are not there - if you price crv at 50k usd volumes will disappear in any country
- Indian taxes - Are there no taxes in other countries?
- Cost of business is high here - do you know how many environmental laws, labour laws and regulations exists that you must comply with in western countries
- Capital costs - I guess the capital costs don't exist in other countries
- Cost of labour and business is super high in western countries compared to India


Either competition or laws against anti-competitive practices will change things. Till then enjoy the 'cream strategy' in developing markets with relatively inelastic demand at the top.

[Equus]

In a country where less than 10% of the population pays tax, what choice does the govt have to control the fiscal deficit?

I am all for the current structure!!! Same with fuel taxes pricing as well.
Cars manufactured or assembled in India provide jobs. So its taxed differently compared to CBUs.

Infact, the tax structure for diesel cars/SUVs might be changed to higher, if diesel prices arent regulated.

As the tax base widens, you will see a lot of moderation in the tax structure. It will happen in due course of time, but there is a long way to go!

Originally Posted by Nitrous Power

I understand that Honda does not manufacture all parts in India but if you see the numbers provided by blackasta, the localization of Civic and City is around 75%.

Localization means sourcing components from local vendors. This feeds the eco-system of the suppliers as well, apart from providing jobs for the assembly.

CBU = completely built unit - Volvo is a prime example wherein all cars are fully built & imported. They pay the highest level of tax.

Honda does import the engines from Thailand but the rest is sourced locally. I think the localization is more than 85% for the City.

[rejoycjohn]

Originally Posted by Nitrous Power

This topic has been discussed to death in various other threads.

@dharmana, Honda manufactures its entire range but the CRV. Higher import duties serves multiple purposes. First, it pushes the manufacturer to set up manufacturing plant if they want higher sales volumes at the same time creating employments in the country. At the same time, it provides the home grown companies time to catch up with international brands.

Mods, Please merge this thread to appropriate one.

Mahindra , Tata started operations in India in the 40s or in the 50s , even after 50years of experience in the industry they still sell vehicles which one can see only in India and other developing nations . If you find them abroad the vehicle would be a totally different breed due to the strict safety regulations .
All these while the government gave them enough and more protection from the International Giants .
And to be fair , all these International Giants didnt have a very big head start
mahindra 1945
tata 1954
benz 1926
BMW 1916
Vauxhall 1903
Ford 1903
Suzuki 1937
* source wikipedia

Well I agree that the economic situation in India wasnt the best in all these years that went by . But I dont think even in this modern era when technology is reaching at its heights we cant excuse our own Tatas and Mahindras for not giving us quality products at affordable prices .

Recent eg :-
We get the Thar 2011 in the same shell as that of MM540 ( It was launched in the mid 1980s ) with a 4*4 and Crdi engine at 7 Lakh ex showroom . The build quality is not something majority of the T bhp population accepts . So something is not right here even with all the protection and government support . I am only wondering where are all this benefits given by government going . Why the normal Indian customer is not getting benefited out of this from our local manufacturers ? I dont think the tax payers money should help these Indian giants to fill up their pockets . They need to invest more into design , R n D , process streamlining .

The same is applicable to two wheelers .

I strongly think that if our Indian manufacturers can give a very good vehicle with a good design and a decent price , all the foreign players would be forced to reduce their price .

The minimum wage in UK is 5.96 GBP per hour . Thats a lot when compared to the labour in India . Again where is this money going?
As given by dharmana , the huge difference in the price of the Mid or High end cars in India compared to other EU or American countries
( not just those CBU and CKD ) cannot be justified .

If we mention the justification of 70% is below poverty line , then why are we not applying the logic for the Electronic Industry ?
Iphone cost the same or less in India compared to UK . Only the same 3-4% of Indian population has high end mobile phones .
For that matter still there are many villages in India which doesnt have telephone facility but a road .
Why dint we give the same oppurtunity as we gave to the indian automotive giants to the electronic companies ?
What happend to BPL , Videocon , Keltron ( It even produced computers ) ?

Honestly this is something which has always quizzed me .

[mayankjha1806]

"India is expensive", don't we hear this very often (i do). in terms of people costs, rate of escalating wages costs, etc etc. All these auxiliary (living expenses, like food, shelter, education etc) costs impact general livelihood of people. We to certain extent are able to absorb this think about the real poor they are the real sufferers.

And as i see it the government doesent seem to doing anything, State and Center both and they are headed by different parties (Just to make a point don't want to start political party debate).

its my opinion, hence we can disagree but i see troubled times ahead for Indian economy primarily because things are very quickly becoming not affordable to many.

[Cyrus43]

Originally Posted by tsk1979

Are you aware that there are other countries in the world where cars are sold apart from UK.

REALLY???

Originally Posted by tsk1979

Also remember, in spite of higher prices, when you do PPP adjustment, cars are cheaper than in India.
Everything is more expensive then India in many western countries. What matters is not the direct conversion but PPP adjusted conversion.

Im sorry, didnt the thread start with a direct comparison??? So then my approach is wring is it (as usual)? And please do also do hatchback prices from other countries and then comment. THey are all more expensive than India.

Its as simple as that!!

[moralfibre]

This topic has been discussed very objectively here - Link -

[tsk1979]

Note from mod: Threads merged

[vb-saan]

Interesting discussion!

I am not sure how effective is this comparison with cars sold in developed markets (e.g.; US, Europe). The markets are different, and the buying sensibilities are different. As someone mentioned, a Honda Accord maybe a luxury model in one country, whereas it will be regular commuter car in another country. For me, ideal comparison should be similar markets, with similar manufacturing costs (e.g.; Thailand).
I will say that the rip off is happening in a different level: Not providing us with the latest technology, engines, and features – or even selling something which is considered as almost obsolete elsewhere. And they sell superior stuff in other countries for lesser price. Exceptions maybe a few like BMW and Honda.

On a separate note, we say that international manufacturers charge a premium for their products in India. But how about Indian manufacturers then – for e.g.; why does the Tata Aria cost so much? Isn't that a rip-off?

[dharmana]

Its not the companies that are ripping us off. Its the Indian govt. Period. I agree that imposing high duties discourages imports and puts pressure on the international brands to start their own production in India to capitalize on the evolving and developing economy, but these brands are only producing the fuel efficient small cars here and not the performance or luxury ones.

Its good that local production generates jobs here and churns more money for the govt but there is also another angle here. The govt wants to protect the local domestic automobile companies like Tata, Mahindra, maruti and ambassador from becoming extinct due to threat from better international brands. But by not reducing the duties on imported performance cars the Indian companies become complacent and stop innovating as they don't have threat from the foreign brands because their prices are so high and very few buy them.
My point is the Indian companies have no chance to compete with the hondas, bmws and audis in the performance segment. They don't even manufacture performance cars. So how can brands like Audi or BMW be a threat to them if they are priced lower by reducing duties? For example no Indian manufacturer makes a car in the 4ltr engine category. I believe Audi Q7 has a quattro 4 ltr engine. So why do the Indian companies feel threatened if Audi sells performance cars in India in the 4ltr category. The Indian companies lobby and force the govt to not reduce the duties on imported cars. In the US or Uk Q7 would cost 40 lakhs. Here we have to shell out 80 lakhs. And the extra 40 lakhs is going straight into the govt's pocket, not the manufacturers. Similarly i can buy a toyota landcruiser in japan for 50 lakhs. Here i have to shell out a crore! isn't it ridiculous to pay 40 lakhs as tax to the govt for a car that costs 40 lakhs? Its all because of this 100% import duty.

And the losers are performance and luxury car enthusiasts, not the fuel economy consious ones because small cars are spared the fate which the SUVs, luxury and sports cars suffer in India. So the persons who need a car to just escape pollution, drive from point A to point B, carry the family or groceries will always be content because the duties don't affect them

[zulfi hansi]

In simple words, but painful effect on all of us, I would say that 'Indian car market is - cheap cars sold for quality prices'.

I don't know for how long do we have to suffer this.

[Zed]

In the long run its important, for both the Indian Auto industry and for the global OEMs, to have a manufacturing footprint and not just a sales & distribution network. The key to meet market expectations is flexible manufacturing systems that can accommodate mass and niche products using the same resources to the extent possible.
Lower excise duties will certainly help in making cars affordable to a larger section of the buying public. Which brings us to the topic of traffic management which, In India, is a fiasco of the highest order.

[Crank]

@Dharmana, I started a similar thread in March '11 and got it merged here. Majority of us agree that cars like Honda Civic or a Toyota Corolla are not luxury or even performance cars. They are just basic, but really good cars. I don't think the problem is just the tax structure. I had went in detail as much as possible in that thread, regarding tax, labour, localized production etc. To me, its more like something wrong with the leadership in those companies. With a connected world this strategy is not going to survive for longer. They should change sooner and price their cars sensibly.

[sgiitk]

Originally Posted by Equus

In a country where less than 10% of the population pays tax, what choice does the govt have to control the fiscal deficit?

There are some obvious answers:
1. Why is the government shy of taxing the agricultural section of the society. If one was to believe that 70% of Indians are agriculturists, then the 10% adds up to 33% of the rest.

2. Waste less money. Most of the govt (ie public) money goes into scams of various kinds. According to Rajiv Gandhi only 15% of the govt grants actually reached the targeted people. I thing the percentage may be even lower now. I am sure the MNREGA figures are far worse. We must learn that the welfare state can only be built on production, and not on printing more money.

The Indian middle- (and upper-) class developed the habit of hiding income when income tax hit 97%! Old habits die hard. When taxation was reduced revenue increased. Now we are slowly creeping back to the good (really bad) old days.