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Difference between a Vehicle’s Ex-Showroom and On-Road Price

Learn the difference between a vehicle's ex-showroom price & on-road price. Ex-showroom price is the price listed by the manufacturer, on-road price includes additional costs such as taxes & insurance.

  • 01 Feb 2023
  • 2 min read
  • 854 views

Are you planning to buy a new car? While you may have shortlisted the car of your choice and arranged for funds, have you looked up the difference between what has been quoted to you as the price of the car by the dealer, and what you will be actually paying? You must know what ex-showroom price means and what is the on-road price of the car you wish to buy before closing the deal.

What is the ex-showroom price?

In simple terms, the ex-showroom price is the price at which dealers buy or procure a vehicle from the manufacturer. This price does not include the cost of vehicle registration, which must be done at the local RTO. Also, the ex-showroom price does not include road tax and insurance costs. Here’s all you need to know to understand what ex-showroom price means:

  • Registration, road tax, and insurance are non-negotiable for driving or riding a motor vehicle in India. Not adhering to these three compliances can attract heavy fines and even imprisonment. The ex-showroom price does not include the cost of these.
  • The ex-showroom price includes the factory cost of the vehicle, Goods and Services Tax (GST), and the profit margin of the vehicle dealer. However, you will have to pay extra for optional accessories.

The ex-showroom price of a vehicle is the advertised price.

What is the on-road price?

The on-road price is the price that you actually pay when buying a vehicle from a dealer. The on-road price is the final amount you pay to receive a ready-for-road vehicle from your dealer. The points mentioned below will help you understand what is the on-road price:

  • The on-road price is inclusive of the ex-showroom price, the cost of vehicle registration, road tax, and the cost of insurance.
  • In case you want additional features and accessories, then the same is included in the on-road price of the vehicle.

You can check the difference between the ex-showroom price and the on-road price using online calculators or by reaching out to the dealer.

Difference between a vehicle’s ex-showroom price and on-road price

Here are the major difference between the ex-showroom price and the on-road price:

Ex-showroom Price

On-road Price

This is not the final price of the vehicle

This is the final price of the vehicle

This is the price dealers pay to the manufacturers

This is the price you will pay to buy, own and use the vehicle

This price does not factor in the cost of registration, road tax, and insurance

This is the price that you arrive at after including the cost of registration, road tax, and insurance.

This price is lesser than the on-road price. It is inclusive of the factory cost, GST, and the dealer’s profit margin

The final price is higher than the ex-showroom price


On-road price for new vehicles

Several factors affect the on-road price of a vehicle. While some of these factors are obligatory, others are optional. It is crucial to know these factors, or else you may find yourself confused between the difference in your estimated purchase price and the actual vehicle price.

• Charges of vehicle registration

Whether you buy a bike or a car, it must be registered at the Regional Transport Office (RTO). Usually, the dealer from whom you are buying the vehicle gets this done. Correspondingly, the dealer includes this expense in the final price of the vehicle that is the on-road price. Note, vehicle registration charges differ from state to state. Also, the vehicle registration charges increase if you want a specific registration number.

• Road tax

When you use a motor vehicle on Indian roads, you must pay the road tax. While this is a component of the on-road price, it is calculated based on the ex-showroom price. Usually, it is a percentage levied on the ex-showroom price, which ranges between 2% and 3%. The road tax paid once remains valid for 10-15 years.

• The tax collected at the source

The dealer levies a tax of 1% of the ex-showroom price of the vehicle. This tax is called tax collected at source.

• Annual maintenance charges

Many vehicle dealers offer an annual maintenance package that includes services like cleaning the vehicle, polishing, roadside assistance, and more. If you take up this package, then the on-road price will increase further.

• Cost of essential accessories

Some accessories such as floor mats and seat covers are essential. You can buy these essential accessories from your vehicle dealer or you can opt to buy them separately. If you buy them from your vehicle dealer, then the cost of the same will be included in the on-road price.

• Cost of extra accessories

There are some accessories that you choose to add to your car or bike to enhance its features and/or efficiency. For example, you may want to buy a trendy helmet for your bike or install a GPS navigation tool in your car. Adding these extra accessories to your purchase list will increase the final that is the on-road price of your vehicle.

• Extended warranty

All vehicles come with a fixed warranty provided by the manufacturer. It is available only up to a certain time or distance travelled. However, you can extend this warranty by paying some additional charges. Remember, this additional charge is included in the on-road price of the vehicle.

• Green cess

Post the ban on diesel vehicles in Delhi and NCR, the Supreme Court of India issued an obligatory cess called green cess, which is charged on the ex-showroom price of the vehicle. The cess differs from state to state and is decided by the government. It is subject to change as per the government’s policy decision.

• Handling charges

Your vehicle dealer must get your vehicle from the manufacturer’s factory outlet or warehouse. The transfer of vehicles from one place to another consists of transportation and handling charges. These charges are added to the on-road price of the vehicle. These costs are included in the profit margin of the dealer. Note, this particular component is not added to the on-road price separately. Rather, this is a component of the ex-showroom price.

• Insurance

As per the Motors Vehicle Act, you cannot drive your vehicle on the roads without valid motor insurance. You must have at least third-party insurance. Usually, dealers have tie-ups with insurance providers and they arrange it for you. Or, you can get your insurance on your own. However, if you get your motor insurance from your dealer, it is only obvious that the cost of it will be added to the on-road price of the vehicle.

Also read:

How to get an effective on-road price?

Besides essentials such as vehicle registration, tax, and insurance, you can opt for as many additional components as you want. Just that, it will increase your vehicle’s on-road price. Therefore, make an informed decision and purchase cautiously to ensure an effective and competitive on-road price. Here are some factors that you must keep in mind:

Registration charges:

Registration charges are essential expenses. You cannot do away with them. What you can do, is not go for special or fancy registration numbers. That way you can save a significant amount of unnecessary additional pay.

Annual maintenance package:

Check the components of the annual maintenance package offered by the dealer. Do not make a rushed decision. Compare components with the inclusions of your vehicle insurance policy even if you have opted for an own-damage cover or comprehensive insurance, and see if there is any overlapping. Also, consider the potential use of the vehicle and cross-check if you need an extensive maintenance package. If not, do not shell out money on the maintenance package.

Selection of accessories:

It is recommended you make a clear distinction between the essential accessories such as seat covers and floor mats and the non-essential ones. For non-essential ones, you should go with a fixed and pre-determined budget; otherwise, you can easily sway off and exceed your budget leading to major expenses.

Extended warranty:

Keep in mind that you will get a warranty from the manufacturer which will be restrictive in terms of time and distance covered. So, before you jump on to extend your warranty and pay additional money for it, pause and gauge the usage frequency of the vehicle. If you won’t be using your vehicle extensively, then there is no point in increasing the on-road price of the vehicle with the extended warranty.

Discount by the dealer:

This can provide you with a significant rebate on the final that is the on-road price of the vehicle. More often than not, dealers offer lucrative discounts on vehicles when purchased from their showrooms. Research well and look out for such discounts from the dealer.

Seasonal offers:

Dealers of vehicles and owners of showrooms also come up with seasonal offers. During the time of festivities such as Diwali, Navratri, and New Year, you may find seasonal discount offers. Keep a track of such offers and plan your car or bike purchase during such seasons to get the benefit of the seasonal discount offers.

Insurance:

Irrespective of the source you buy your vehicle insurance cover from—whether you buy it from the insurance provider directly or the dealer—make sure you are not paying out premium money for unnecessary or redundant coverage and/or features which might not be of any use to you.


Conclusion

Now, that you know the difference between the ex-showroom and the on-road price, you are in a better position to understand how the pricing of a vehicle is usually done. Also, it is all the more important to understand the components of the two prices and what affects them. Here, is a quick recap of the important points that must be kept in mind before you pay the on-road price for your vehicle:

  • The on-road price is always more than the ex-showroom price.
  • Ex-showroom price is not inclusive of the registration charges, road tax, and insurance.
  • The on-road price has some essential components and some non-essentials. Thus, the final on-road price varies as per the services and accessories you chose to avail.
  • It is the ex-showroom price that is usually advertised.
  • The price that you pay during the final purchase of the vehicle and make it ready to use on the roads is the on-road price.

FAQs

Can I buy car insurance from any insurance company other than the one suggested by the car dealer?

Yes, you can buy car insurance from any insurance company that you deem fit for your car and preferences. You do not have to buy an insurance plan from the company suggested by your car dealer.

Can a car’s on-road price vary from one car showroom to another?

A car’s on-road price depends on several factors which vary from service to service and product to product. Consequently, depending on the type and number of services and accessories available, the on-road price of a vehicle varies across showrooms.

How to arrive at a car’s ex-showroom price and on-road price?

The ex-showroom price means the price which the dealer pays to the manufacturer. It includes factory cost, GST, and the dealer’s profit margin. Now, to this ex-showroom price add the cost of registration, road tax, and insurance to arrive at the on-road price. The on-road price can further increase if you take additional services and products.

Why is it that a vehicle is usually more costly than what it is advertised as?

A vehicle is usually more costly than what it is advertised as because advertisements highlight the ex-showroom price and the vehicle costs more when brought to the road. The on-road price is always higher than the ex-showroom price.

Why is it that in most cases the on-road price of the vehicle is not mentioned in the advertisements?

It is important to note that the components of the on-road price of a vehicle are subject to the choices made by the customer. On-road price primarily includes registration charges, road tax, and insurance. These are compulsory expenses while the rest are negotiable. However, whether the customer will pay the compulsory expenses through the dealer, or will take up to arrange and pay for them on their own, is a choice. Therefore, that cannot be put across in the advertising amount.

Is it possible to get a discount on the vehicle’s ex-showroom price?

Chances are very low that you will get a discount on the ex-showroom price. However, you can bag attractive discounts on the on-road price of a vehicle.

How can I find a car’s approximate on-road price?

Several online calculators can help you find the approximate on-road price of a vehicle based on the ex-showroom price. Or, you can call the dealer of the vehicle and ask them for the quote.

Is it all right if I do not buy the extra accessories and servicing package from a dealer?

It is absolutely fine if you do not buy the extra accessories and servicing package from the dealer. You should be cautious while choosing accessories and refrain from making unnecessary purchases. Go for those items which you think are essential. Also, you may buy the accessories from some other source as well.

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