[don_carmaster]

Originally Posted by aaggoswami

1) High Taxes. IIRC, in EU, its Britain which has such high taxes and also ( as we followed their system ), India has very high amount of taxes. Last year, some reverse calcuations showed that a Cruze would cost Rs. 10/- lakh and not Rs. 15 lakh. This was done by a sales person in GM showroom when I went with my friend to inquire about Cruze. 25% excise = 1/5th of the original price. This is way too much.

Straight away Rs. 15,000 tax on all cars above 4 mtrs. in length and having engine capacity more than 1.2 ltrs. for petrol and 1.5 ltrs. for diesel.
This is ridiculous.

VAT is also another example.

Its not only purchase, but also maintenance which is expensive. Pay excise and VAT while buying car, pay service tax everytime you service your car. All firms are to do business, so we cant actually help here, here and here.

2) Profit margin. Believe it or not, in its good Days, Honda managed to earn a lot of profit with sales that were less than a fifth of Maruti. Just to indicate that manufacturers are having their own good profit margins.

Thanks alot for your instant and informative post.

So in total this refers to that whatever the amount excessive we are paying for these vehicles is going to goverment...?

The refernce you gave for cruze, so when we are talking of manufacturer margins, the percentage is calculatd on 10 lakhs or 15 lakhs.?
And do just the good profit margins entitle a manufacturer to price a car at least a a 30 percent lower rate ?

For that reference, the supersport version of the jaguar xjl costs upwards of 1.15 crores in india on the road, IIRC.
And the same version with the only change of a LHD configuration in Us costs somewhere near 70 lakhs.

Do excise taxes create the difference here.. Too?
If it is then we are certainly being badly looted.
Or is the import costs involved with it.

Please enlighten me.

Thanks in advance.
Sahil

[aaggoswami]

Originally Posted by don_carmaster

1) So in total this refers to that whatever the amount excessive we are paying for these vehicles is going to goverment...?

2) The reference you gave for cruze, so when we are talking of manufacturer margins, the percentage is calculatd on 10 lakhs or 15 lakhs.?
And do just the good profit margins entitle a manufacturer to price a car at least a a 30 percent lower rate ?

3) For that reference, the supersport version of the jaguar xjl costs upwards of 1.15 crores in india on the road, IIRC.
And the same version with the only change of a LHD configuration in Us costs somewhere near 70 lakhs.

Do excise taxes create the difference here.. Too?
If it is then we are certainly being badly looted.
Or is the import costs involved with it.

1) Not all cost. The excessive tax amount is the amount which goes to government, but as far as prices of cars are concerned, the input cost might be different in India.
From what I have read, India has ( had ) lower labor rates, but the volumes are not that high as lets say, China or Japan.

If a model costs higher in India, it could be also due to higher input cost in the first place, then the taxes give the big blow.

2) I did not have a word on that, but IMO, it has to be on Rs. 10 lakh as the extra amount will in any case go to government.
Even I am looking forward to updating my myself here.

3) The import duty one has to pay is around 105%. That is reason why CBU are expensive. Fortuner came in here by CKD route, so did even Octavia.

IMO, we all are here to learn more and share knowledge.

[Rollingwheels26]

Hi all,

Disclaimer: A newbie here. I have been following Team-bhp avidly for the past 4 months and other than a couple of replies here and there this is my first thread ever ! So please feel free to correct me where i am wrong ! @Mods: I tried searching for a similar thread and couldn't find one.


I was looking at Hyundai Elantra's Indian website (we are planning on buying it) and i came across the following post there- (Refer attachment 1)




I was pretty surprised on reading this since i had always assumed that car makers sold their cars cheaper in India (excluding CKD and cars that are imported as one piece since they have HUMONGOUS excise duties to pay). But Elantra is manufactured at Chennai (according to the information on Elantra's Wikipedia page) and hence it should be cheaper to manufacture.

With this doubt sown in my mind i went to Hyundai's USA website and checked the process of their models there. The ex show room prices were almost 2/3 of what they are in India (refer attachment 2.) In red i have written the showroom price in rupees based on exchange rates as on May 31 2014.




As you can see the costliest car in their lineup is the Sante FE whose ex-showroom price is just 17 lakhs ! And if you check the on road price it comes to just arouns 19 lakhs which is WAY cheaper than India.


Now all this while i had the image of Hyundai providing awesome cars in India at cheap prices. But this has shaken my views. Now am wondering if other car manufacturers (who manufacture their cars in India and dont import them ala Ferrari, Bugatti etc) do the same -Honda, VW, Skoda am looking at you.

Am i missing something here ? Are the high prices for a reason or just to build an aspirational brand value?


And in case you were wondering- Yes i checked the features of the USA models vis-a-vis the India models. There are ONE OR TWO minor changes (mainly cosmetic) but then they also get a 10 year warranty on drive train and 7 years on anti perforation (no idea what that means !) as standard which we dont !



P.S Am not hating on Hyundai. I love their cars and am planning to buy one. My question of of the price disparity across car brands

[Bluebeem]

The US as a car market does an insane amount of numbers. I guess that remains the key to their cheap pricing. Stiff competition and economies of scale.

Secondly and most importantly, Hyundai has tried to position themselves as a premium carmaker in india contrary to US where they may be positioned at the lower end of the spectrum.

Most Cars in india are priced parallel to their prices in UK. Try comparing those.

[giri1.8]

Originally Posted by Rollingwheels26

Hi all,
P.S Am not hating on Hyundai. I love their cars and am planning to buy one. My question of of the price disparity across car brands

If you think this is unfair then take a look at i10's crash test video. The one made for the europe has scored 4 stars while the one made for India from the same factory got a big ZERO. I am in the market for a small hatchback and i10 grand fits my requirements perfectly, I even took a test drive and was satisfied with everything, but crash test result of i10 made me stay away from the grand! I informed the sales person to report my discomfort regarding the safety aspect to the management, if enough of us reject cars for being less safe they will be forced to make them safer! its as simple as that.

[Rollingwheels26]

Originally Posted by Bluebeem

The US as a car market does an insane amount of numbers. I guess that remains the key to their cheap pricing. Stiff competition and economies of scale.

Secondly and most importantly, Hyundai has tried to position themselves as a premium carmaker in india contrary to US where they may be positioned at the lower end of the spectrum.

Most Cars in india are priced parallel to their prices in UK. Try comparing those.

According to this article Hyundai sells roughly 400000 cars in India a year. While in USA they sell around 720000 odd so i guess you have a point.

But regarding their positioning well if Hyundai was poisitioning themselves as a premium car maker then they wouldnt be making EON, i10, i20 etc would they ?

[mail4ajo]

Compare India's car cost to Malaysia. We are way cheaper.

Be happy that you are not forced to buy only local brands and enjoy Japanese/European quality provided you can pay for it.

[Rollingwheels26]

Originally Posted by mail4ajo

Compare India's car cost to Malaysia. We are way cheaper.

Be happy that you are not forced to buy only local brands and enjoy Japanese/European quality provided you can pay for it.

Am not complaining. I knew there are countries where cars are be costlier than India , but my main grudge was USA getting cheaper and at the same time more loaded version of Indian cars. I mean they are a country with higher purchasing power yet get best of both worlds. The injustice rankles me

Call me a pessimist but i wouldn't it better that we compare with countries that are cheaper and not costlier

[arit.mondal]

@rollingwheels, I feel sad too when I see USA prices and compare them with the prices we are charged here in India.

I feel its tragic that the middle class here with lower income than the middle class of USA have to shell out higher amount for the same car.

Come to think of it, a Santa FE costs around 17% of a new grad's salary (w.r.t. 100k of starting salary received by software engineers in USA), whereas here in India it would cost almost 300% of a new grad's salary (many NIT and most IIT grads too manage around ~10lpa only).

Our dream supercar in India, might just turn into reality if we can manage a job in USA.

[lurker]

Originally Posted by Rollingwheels26

As you can see the costliest car in their lineup is the Sante FE whose ex-showroom price is just 17 lakhs ! And if you check the on road price it comes to just arouns 19 lakhs which is WAY cheaper than India.

In USA you have to add VAT and some other taxes on top of the ex-showroom price and that makes buying cars cash down pretty expensive. Since most people in USA either lease or buy cars on EMI, they do not have to bear the initial sticker shock of additional taxes. But those who buy their cars with full payment in advance do grumble that they had to pay a lot more than they were initially led to believe.

[Jeroen]

Originally Posted by lurker

In USA you have to add VAT and some other taxes on top of the ex-showroom price and that makes buying cars cash down pretty expensive. Since most people in USA either lease or buy cars on EMI, they do not have to bear the initial sticker shock of additional taxes. But those who buy their cars with full payment in advance do grumble that they had to pay a lot more than they were initially led to believe.

No matter how you pay, you always need to pay the VAT, regardless. At leasy as an ordinary private person,ie consumer.

[rohanjf]

Originally Posted by lurker

In USA you have to add VAT and some other taxes on top of the ex-showroom price and that makes buying cars cash down pretty expensive. Since most people in USA either lease or buy cars on EMI, they do not have to bear the initial sticker shock of additional taxes. But those who buy their cars with full payment in advance do grumble that they had to pay a lot more than they were initially led to believe.

Do you mean, the sticker price in USA is excluding all taxes, but in India, many taxes are already included in the ex-showroom price (such as VAT, excise duty)? Then I guess Indian made/assembled cars aren't way too expensive

But when we compare the prices of hatchbacks in India and Europe, I think these budget cars are priced pretty competitively here. I don't think the Polo GT Tsi is that cheap in Europe compared to India, even though many crucial components are imported.

[Jeroen]

Originally Posted by rohanjf

Do you mean, the sticker price in USA is excluding all taxes, but in India, many taxes are already included in the ex-showroom price (such as VAT, excise duty)?.

Yes, everything in the US is priced ex VAT. Not just cars, but everything in shops as well. VAT is different per state as well.
As far as I know it is only ex VAT, but the stickerprice typically does include duties and that sort of thing.
Br Jeroen

[jinojohnt]

Aren't the Insurance and Labor (Service) expensive in the West? Does that mean the total cost of ownership remains roughly the same as that of india?

[drsingh]

Originally Posted by Rollingwheels26

Hi all,

Disclaimer: A newbie here. I have been following Team-bhp avidly for the past 4 months and other than a couple of replies here and there this is my first thread ever ! So please feel free to correct me where i am wrong ! Now am wondering if other car manufacturers (who manufacture their cars in India and dont import them ala Ferrari, Bugatti etc) do the same -Honda, VW, Skoda am looking at you.

Am i missing something here ? Are the high prices for a reason or just to build an aspirational brand value?

It is a well known fact that Indians are willing to pay more for aspirational goods and brands that project affluence. That's why all car brands market affluence in their advertisements except maybe Maruti.

That's why everything from luxury watches, clothes, shoes, air conditioning, home decor is priced higher by 40-50%

On the other hand, the market is bigger and taxes are lower in the US. The regulators are very effective at what they do and big consumer watchdogs such as consumer reports have a big impact on the purchase decisions, consumers at much more informed .

The above factors lead to lower upfront costs and better quality and warranty.


OT: Two incidents come to mind on the importance of the 'projection of affluence' and how we 'value the sticker price more than the actual goods on merit'

My expat CEO (I worked for a while in the corporate world) told me how he was taken more seriously at the IRDA offices when he shows up in a cavalcade of two Audis with a couple of Innova cars as pilots with him ultimately leading a group of 15 people. In the UK it would have been 3-4 people including him.

If you are in a position where you need to project power and affluence (is how the world works) big cars are an important tool. And we know how important power and affluence (true or projected) are in our society to get things done. And people at willing to pay a premium for it (to stand out from the crowd) .

An astute businessman is a family friend who told me this story a couple of years ago.. He is a terrific negotiator and is well aware of the profit margins in the textile business.

When he was younger he took his wife shopping and after two hours she selected some saris one of which was more expensive at 8k rupees at the time .
So this man then proceeded to sit down with the owner and gave some references and negotiated the price down to 3.5k rupees.

As soon as his wife learned of the negotiated price, she lost all interest in the sari and refused to buy it :-)

So the next time a noob asks you about your spanking new ride, and instead of asking about the 'engine, ride or pickup', throws this question at you - - - " kitne lakh ka gaadi hai?" , don't be surprised