I was curious why forex rate changes don't show up in car prices that have some component of imports. For most of the C+ higher segment this ranges from 25% to 100% (CBUs). In a simplistic model if a car price has X% import component then a Y% appreciation in INR should lead to about X*Y decrease in the price. Following is a table assuming 15% rupee appreciation (as with INR vs. many currencies recently)
Car Price Import fraction Expected decrease
10L 0.3 4.00% - 45K INR
12L 0.4 6.75% - 81K INR
24L 1.0 15.00% - 3.6L INR
So the variations could be pretty large based on localisation content. Who gets to pocket these "gains" ? Why these don't get passed on to the poor buyers. Have there been precedents where a company has passed on such gains to the end buyer. I understand it would be cumbersome to change a car price everyday as forex rate moves but periodically it could be possibly done.
Car Price Import fraction Expected decrease
10L 0.3 4.00% - 45K INR
12L 0.4 6.75% - 81K INR
24L 1.0 15.00% - 3.6L INR
So the variations could be pretty large based on localisation content. Who gets to pocket these "gains" ? Why these don't get passed on to the poor buyers. Have there been precedents where a company has passed on such gains to the end buyer. I understand it would be cumbersome to change a car price everyday as forex rate moves but periodically it could be possibly done.
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