Car pricing sweet-spot: Getting maximum value for the minimum price

Rs 20-30 lakhs is the sweet spot, beyond which you start suffering diminishing returns.

BHPian akshye recently shared this with other enthusiasts.

For any product, there is a point of diminishing return – a price point, past which, the gain isn’t much for a major price increment.

In the case of audio equipment, some refer to the 80:20 rule – at 20% price (of the best there is), you almost have reached 80% quality (of the best on offer). Afterwards, you’re not going to get perceivable quality gains for the next most expensive product.

In your experience, where is the point of diminishing returns for cars? On both sides – luxury car or sports car.

Here’s what GTO had to say on the matter:

Great thread idea.

I would say 20 – 30 lakh rupees, depending on the body style. The 10-lakh cars are too basic now, while the 40+ lakh ones are absolutely overpriced (including the Fortuner & C-Class). 20-30 lakhs is the sweet spot, beyond which you start suffering diminishing returns.

If crossover / SUV, do you really need anything more than a fully-loaded Creta / Safari / Hector / XUV700 in life? Among sedans, the Octavia punches way above its weight and easily matches 50-lakh sedans on many parameters. Frankly, even the Honda City (more space than an A4) & Slavia 1.5 TSI are sedans that meet every need. MPV? Does anyone really need any more “van” than an Innova Crysta or Carnival (whose variants were available under 30 big ones)?

No one needs any more cars than the 20 – 30 lakh ones. Anything over that attracts the law of diminishing returns. Hell, other than the style & 4×4, I consider the Innova Crysta to be a superior car to the Fortuner. The cannibalism was so much that Toyota discontinued the Innova 2.8L AT variant to differentiate the Fortuner.

Here’s what BHPian V.Narayan had to say on the matter:

80% of the value for an attribute could be 99% for one person and 50% for another. And it all varies with the size of the buyer’s pocket, the buyer’s attitude {wishes to flaunt or otherwise}, and the attributes he/she prioritizes. You could have a buyer who can afford an S class Mercedes but prefers an E or even a Camry to stay under the radar relative to his position. For others, it could be the other way around. So I guess 100 car buyers will have 101 views on a topic like this.

Here’s what BHPian locusjag had to say on the matter:

I agree with Mr Narayan here – I am a curbed enthusiast on the forum (Larry David’s “Curb your enthusiasm” and its famous jingle song comes to mind). We are all automotive enthusiasts here, sure. But I have been curbing my enthusiasm for a variety of reasons, most of which are rooted in our realities…

As a curbed enthusiast, anything over 5 to 10 lakhs is a point of diminishing returns for me.

Here’s why – we have begun paying a very high cost for helping to protect the world, here in India. This is at a time when citizens of the developed world have horrific carbon footprints, owing to heating in winter, transportation of essentials over longer distances and low population densities (e.g., Canada, Australia, Texas in the US etc.), horrible consumption-driven lifestyles (e.g., Fijian spring water, which gets produced on one side of the globe, gets shipped over the world) etc. Meanwhile, these lucky citizens get to drive their decades-old vehicles with abandon. My friend in Connecticut, USA, gets to happily drive his 20 year old $1500 used Camry, which has 300,000 miles on the odometer. All he has to do is get a fitness test done once every 3 years and he’s good to keep running it. Our NCR region meanwhile has a useless 10 year/15-year ban on ICE vehicles. Kolkata has begun imposing a 15-year scrappage rule now. This cancer will begin spreading.

On the other hand, we have stubble burning by farmers (endorsed by Greta the horrible), rampant burning of garbage and multiple other actual contributors to a poor AQI and greenhouse emissions (the global shipping industry which runs on crude oil, the construction industry, the meat industry etc.). Car owners are 100% sure to be soft targets of agencies such as the NGT and our courts.

Whatever you buy now is sure to be affected by a stupid scrappage law wherever you live in India – just give it a period of 5 to 10 years.

So when I look at all these cars in the 10+ lakh range, I am unable to appreciate all of their features when I presage their inevitable fate at the hands of a scrappage facility’s car crusher. And of course, there is the prospect of imminent depreciation of cars as a result of mandatory scrapping. There’s a healthy chance that all our present vehicles are money pits! So I just need a car that will run and provide returns on my minimal investments at the present. My strategy going forward is to spend the least amount of money possible on ICE cars so that I will be able to scrap them as and when needed, without having to shed tears for it.

Thus, any car that can do more than run reliably is already beyond the point of diminishing returns for me.

Damn you, Greta.

PS: I am not against measures to curb global warming. I am merely against climate change charlatan gurus and “safe” yet useless measures against soft targets such as car owners. If we are seriously planning to tackle global warming, I believe mankind must prepare to tackle our hardest and most meaningful problems first, even if it means kicking several hornets’ nests such as cutting down on meat consumption, stubble burning etc.

Here’s what BHPian SmartCat had to say on the matter:

Price of cars I’ve bought in the past 2 decades:

  • Year 2004 -> Chevrolet Optra -> Rs. 11.3L
  • Year 2010 -> Honda Civic -> Rs. 8.3L (pre-owned)
  • Year 2015 -> Maruti A-star -> Rs. 3.3L (pre-owned)
  • Year 2016 -> Honda BRV -> Rs. 15.1L
  • Year 2021 -> Hyundai Venue -> Rs. 12.2L

Clearly, my sweet spot for cars is the Rs. 10L to 15L price range.

That’s because cars and consumer electronics like TVs/phones etc are immune from price inflation. Meaning, that for the same price, you get a better product now than X years ago. Examples:

  • Rs 10,000 phones bought in 2022 will be better than Rs 10,000 phones bought in 2012.
  • Rs 15 lakh car bought in 2022 will be better than Rs 15 lakh car bought in 2012.

When you are getting a better product for the same price, I see no reason to spend more on a car over the years.

Check out BHPian comments for more insights and information.

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