Question

Discuss the factors that have affected the Indian car market over time. How have these affected pricing decisions among car makers like Tata Motors?

Answer 1

Automobile industry is best option for revenue raise in any kind of economies. How ever india is considered to be most competitive country in this regard.

Earlier excise duty / VAT were two types of taxes / duties levied on vehicles like motorcycles / smallcars / scooters and commercial vehicles of this particular industry.

But in recent times GST was introduced. Thus many things changed after GST introduction.

* earlier two taxes charged to end consumer on cars and bikes were an avg combined rate of 25% to 44% which are higher than now available GST rates 18% to 28%

Thus tax burden on customers is decreased in this way.

* earlier dealers / importers were unable to claim VAT / excise. But now GST can be claimed.

* stock transfers will be covered under IGST however.

* a decrease in production prices is also obseeved. Since claim is made available at each stage of producing parts / spare parts and also efficient supply chains created via GST.

Other factors that are affecting indian automobile industry prices. Eg Tata Motors

* interest rates :

interes

t rates on loans taken to purchase cars are indirectly proportional to demand. And also drop in it helps only few people to shift from basic to deluxe model.

* marketing / advertising :

Due to various marketing / advertising techniques large amount of public will get to know about the vehicle and that increases the sales volume to manufacturers.

* Income level of customers :

Increased percapita income leads to greater zeal to enjoy comfortable lifestyles. These kind of increase in incomes leads to increase in purchase of new cars by consumers.

* Technological advancements :

Facilities / luxuries can be created with less cost when there is better form of technology increase. That also increases people nature to opt cars with deluxe models than basics.

* global pricing of crude oils

These prices decide petrol and diesel prices world wide. Since fuel prices are inversely proportional to cars. Their prices changes obviously effect cars prices

* high competition :

Due to presence of many car manufacturing companies , more amount of cars with new features are being available in the markets. Thus it decreases per company market share.