This little question has always bugged me. Why do we see more of the Swift Vxi and Lxi than the Zxi even when it is clearly worth the extra money spent? Or why do people choose to go for the Active variant of Fiat cars and then load them up with aftermarket accessories. What is it that drives the buyers toward low and mid-range variants over the top end variants? It is not like the price difference is huge or the manufacturers ask for lot of money for the equipment they offer. In fact, most of the cars are offered with lot of safety and luxury features on the top variant. So we try to find out why this happens in Indian car scene and we have listed down some of the factors.
Well this is obviously the biggest factor here. In most cases the low end variants are miserably underequipped and thus offered at very low prices. Even manufacturers have got slim margins at the base variant but they have to stay competitive in the market. If their rival is offering the car at a starting price of 5 lac, they have to price their car close to stay in the fight. Most of the times car makers do that by removing equipment from the base variant and offer a low starting price for the range. While even a decent number of budget conscious buyers opt for the mid-range variants, many buyers who are looking for an upgrade are lured by the relatively affordable low end variants. And in most cases, it is still an upgrade for them as they are coming from a smaller car or in some cases a two wheeler.Many countries would put huge taxes as you move up a class of vehicle. On top of that the insurance costs are driven up skywards with a bigger vehicle which isn’t exactly the case in India.
This is also one of the reasons that impressive products like Skoda Yeti failed to make a mark in the Indian market. The manufacturers launched the fully loaded feature rich four wheel drive variant and that drove the starting prices northwards. They later launched a 2 wheel drive variant with less equipment to lower the starting price but that doesn’t work well. People already have an image of the product and then they start comparing it to the top end variant as what they have removed.
India is a relatively young market for cars. Two wheelers have been around for a long time but the exponential growth in car market has been seen for just the past 15-20 years. So people still aren’t well educated about all the features and equipment. For many buyers, a Swift is a Swift and that is it. Most buyers acknowledge just what is visible to them and that is it. The amount of sheet metal you get for your money sells in India and that is the reason cars like Dzire have been a huge success in India even when it is hard to see the point. People see a big car and they rush for it. Theycan’t be bothered about what the ABS or ESP system is and how it is going to help them. Even if they get the importance of ABS, airbags are absolutely useless. I have come across people questioning the point of getting a car with ABS if the airbags will just sit inside the dashboard forever. What exactly do they expect the airbags to do?
The issue here is that people will buy the lowest variant, spend a little amount on a new set of alloy wheels, similar amount for an impressive music system, a fraction of the amount on a remote keyless entry system and then tell you how they spent a fraction of the price difference and now their car has a better equipment than the top end variant of the same car. No it hasn’t. It still hasn’t got features like airbags to keep you intact when you lose control or ABS to save you from losing control in the first place. And you can’t just blame the buyers. Many dealers would tell you how the low or mid-range variants are ‘just as good’ as the top variant and they can sell you aftermarket accessories to match the features and get them fitted at the company service centre itself. This has resulted in a large number of buyers getting the low end variant rather than the fully loaded top end variant.
This is another very important factor that drives the sale of lower variants more than the top end variants. The used car market in India is much bigger as compared to many developed countries. But the thing with used car market is that you don’t get what you pay for. Not many people would acknowledge the extra price you paid for the high end variant. For this reason, people who change their vehicles frequently will refrain from spending more money on a higher variant.
Moreover, the second hand car market in India is driven a lot by the popular models. You can easily find even low end variant of the popular cars going for more than the high end variant of a less popular vehicle. Cars like Honda City, Suzuki Swift, and Hyundai Verna will attract buyers offering better prices as compared to even the top of the line variants of cars like Fiat Linea. This puts away buyers from these variants. If they are not going to sell it off then they would expect some premium on this price but they aren’t going to get it. This problem starts off at a very earlier stage when people buy the cars. Like the case we mentioned under the previous heading, if buyers don’t value the importance of high end features while buying a new car, they won’t do that in a used car.