Being a diehard auto-enthusiast (well, maybe not diehard, but still an auto-enthusiast), I always envied my American friends and colleagues for the variety and price that they get while buying cars in the States. They also get to lease cars for virtually any duration of time (at realistic prices too), something that is non-existent here. My friends in the states who buy used cars, quite often get them in mint condition, unlike the options that I had when I thought of buying a used car 2 years back. So today when I went online, I thought of looking at the American automotive market at a more granular level, and so I searched for American automobile websites to see what variety and price range Americans get.
For instance, a Honda Accord in India costs anywhere between, Rs 20 Lacs to Rs 27Lacs (Approx 25Million Rupees). In the States, the same car, with more engine options, sets you back by only $20,000-$24000. Now even if I take the Dollar-Rupee exchange rate at Rs55 (to give this comparison a fair chance of reasoning), the entry level American Accord costs Americans about Rs 11Lacs (1.1 Million Rupees). Besides, when I was looking through the stats, most of the cars there have a higher power range, better transmission (of course lower fuel efficiency, but that’s beside the point). If you take SX4 in India, you pay about Rs8-9 Lacs(0.8-0.9 million, or about $15500) with a 1.6Ltr Petrol or 1.3Ltr Diesel engine with about 102HP & 90HP respectively, while in the USA, though the car costs about the same - $16000(one would think it is good news for people like me, yeah right!), but it comes with a 2.0 Ltr engine with 148HP. These numbers become more shocking when comparing cars, such as Mercs, Beemers, Audis, etc
I always knew that the reason for such differences - TAX, something that a friend of mine who recently returned from the States re-affirmed. I am not sure precisely, what the American government levies and what the Indian Government levies, but one can get an idea by just looking at a simple comparison that I just made for the Accord. In India, cars are considered a luxury item. Taxes are high, and despite a lot of people now having some or the other car.
Another reason of course is the level of automation in the factory that is itself dependent on volumes. Needless to say, USA has higher numbers in terms of volumes, and that is again part of the reason (Economies of Scale). However over the years, I don’t see the effect of increasing sales numbers indirectly reducing the cost of car in long term (ignoring the ever increasing tax & near double digit inflation). The way car & fuel prices are going, im considering looking for jobs that allow all work to be done from home.
Having been to the States once, I remember that it was a heaven for auto-enthusiasts like me. The variety, the drive on freeways (though I didn’t get a chance to drive much), were simply ….. ‘Peaceful’. I wish one day I get to lease a car in India and change it every year, but that is probably a few years away.
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