Variation of Car Prices in India
66Variation of Car Prices in India
Indian car market is growing progressively and is considered to be the fastest growing markets of the world. With the passage of time many new cars and introductions have entered the market and today the car market in the country is packed with a fleet of cars belonging to different segments.
In the midst of so many cars plying on roads what is most surprising is the fact that one particular car model differs in its price in different eras, states, and economic situations in the country. The basic components of car prices in India are ex-factory price, ex-showroom price, and ex-road price.
Ex-factory price is the price at which a car manufacturer sells the particular car model to the dealer, ex-showroom price is the price at which a dealer sells the car to the buyer, and ex-road price of the car is the price at which a car buyer drives away the car from the showroom. Based on these basic components there is a huge variation of car prices in India.
Variation of Car Prices from State to State
The process of evaluating new car prices in India have to undergo various considerations before it actually reaches a buyer. At first an ex-factory price of the car is set based upon the cost of production and then ex-showroom price of the car is evaluated keeping some profit margin for the manufacturer as well as the dealer. When a buyer drives away the car from the showroom or the dealer car insurance rates, road tax, handling charges, and logistic charges are added to the ex-showroom price of the car. If a particular car model has some sort of customization or optional technologies then the price of the same is also added to the ex-showroom price of the car. All these components together help the dealer set new car prices India.
The factors responsible for varied car prices in India from state to state are described below:
Car Insurance: Car insurance is obligatory in India for all the cars plying on Indian roads. Insurance is purely based on varied factors like actual cost of the car, driving style of the driver, any accident history of the car owner, traffic pattern of the city, and the local cost of the car component. Depending on these different cars in India are priced differently. As the price of the insurance is added to the ex-showroom price of the car one particular car model may be priced differently in different regions.
Road Tax: Road tax varies from state to state and is controlled by the local or central government. Every car owner has to pay tax to the government to drive the car on road. The primary reason why the government asks for road tax is to have a better control on traffic flow and ease road congestion. At present it is believed that Karnataka Government imposes the highest road tax on automobiles followed by the Maharashtra Government. Delhi, Chandigarh, and Haryana have comparatively lower road tax and thus cars available in these regions are cheaper than the ones available in Karnataka and Maharashtra.
Handling and Logistics: Handling and logistic charges are also added to the ex-showroom price of a car. When a buyer books a car the car has to be delivered to the owner’s place and this adds all the handling and logistic charges to the calculated cost of the car after the addition of insurance and road tax.
Variation of Car Prices in Different Era
Since the time cars have been introduced in the market the prices of varied car models have changed a lot over the period of time. Earlier cars were cheaply priced but gradually with the advent of technologies and innovations, cars started modifying and so did the car prices started soaring. Car prices in India have hence changed over a period of time. Today cost of a car includes many components including the number of car accessories, functionality of varied technologies, car insurance rates, and road tax of driving a car in a particular state.
In the bygone era cars were sold at a price tag of around Rs 35,000 to Rs 50,000 but at that time spending few thousands of rupees was also a nightmare for car buyers. Gradually when new technologies and new concepts were introduced in cars the price raised from thousands to lakhs. Today if a buyer goes to buy a car he or she can only buy one technology or car accessory with an amount of Rs 35,000, buying a car with such a low amount is beyond imaginations.
In the earlier days there were no power windows, power steering, and other electronically controlled car devices ad hence the cars were comparatively cheaper. The scope of earning and wages of people at that time was too less because during then the economy was growing and it was the start of industrialization. Most of the people were involved in farming, knitting, and other hand crafted works that gave them restricted income. Even industries offered very low salary packages to the employees. Hence spending an amount of Rs 50,000 to buy a car during those days was actually a challenge.
Gradually as economy started growing and the industry started progressing the earning potential of Indian populace also started soaring. New talents and skilled professionals are now earning much more than required and so a large number of people are capable to spare some amount on luxuries like cars. The demand does not end here because as the wages are improving buyers aspire more in terms of cars. Buyers now look for technologies, features, and accessories in the car as they all desire to have a refinement and comfort that they can experience on every journey when on wheels.
New car prices have actually increased from thousand to lakhs and crores. There are many premium super luxury cars that are tagged with a very high price tag and buyers are actually willing to spend on these luxuries.
Variation of Car Prices under Different Economic Situations
In the present scenario the industry has drastically changed. Recession has also brought a great variation in car prices in India. The cost of buying a car has become cheaper and all the car manufacturers in the country are struggling with sluggish sales. The current recessionary pressure has taken the entire industry in its clutch and is now pushing manufacturers, dealers, and sellers to cut down the car prices to lure waning car buyers. The intent to offer discounts and schemes is purely to add life to struggling sales in the country.
Just before recession had hit the market inflation had taken the industry into its grip and that also resulted in variation of car prices. The high price of steel and other key components had eventually led to high cost of production. This in turn had forced all manufacturers to raise car prices because they were not getting any profits by keeping the prices low.
Later, the government had reduced the excise duty on cars and that benefit was passed on to the consumers. This actually passed on a ray of joy to both the consumers and the sellers but the joy was not celebrated for long as recessionary pressure was still there in the air. At that time irrespective of the high cost of production and effects of inflations car manufacturers were forced to offer their range of car models at discounted prices coupled with new schemes and offers.
Even at present the industry is struggling to boost car sales. The price cut is now being seen as a stimulant to car demand and gradually with a number of new car launches the market is improving. Today, when the manufacturers or the dealers offer Indian car price quote, they consider each and every detail with respect to recession, waning buyers, high cost of production, and new technologies.
Variation of Used Car Prices in India
Used cars prices Indiaare also subject to the same rule of variation. When it comes to buying a used car the used car owner may already have paid the insurance for a specified annual and the road tax is paid only once. So, the used car buyer need to pay these extra charges but if in case the insurance policy has collapsed he or she has to pay for the used car insurance. If in case the buyer desires to take the used car to some other state then he or she also has to pay the road tax.
At present the used car market is India is influenced by the launch of world’s cheapest car Tata Nano by Tata Motors. The launch of this marvelous car is a threat on used car dealers and they are all forced to cut down the prices of their used cars in order to pull away buyer’s interest from Nano. Due to recession and job layoffs also many professionals have also sold back their financed cars and this also has forced used car dealers to cut used car prices in India.
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