Typically in the vehicle advertisements that you have seen on Television or in Newspapers, the price they show is the Ex-showroom price. But when you actually visit the showroom and ask for the actual price of that vehicle they tell you the On-road price. This strategy is used by companies to get more and more responses from the target audience.
Having a car or a bike of our own is important for day-to-day transportation. If you are one of those who are looking for buying a vehicle for yourself then you might have come across the terms ex-showroom price and on-road price.
While the ex-showroom price includes the cost of the vehicle plus transportation charges from the manufacturer to the dealer and the seller’s profit. On-road Price is the ultimate selling price of the vehicle which the buyer pays to the seller for bringing the vehicle home.
Content: Ex-showroom Price Vs On-Road Price
Comparison Chart
| Basis for Comparison | Ex-showroom Price | On-road Price |
|---|---|---|
| Meaning | Ex-showroom price is the vehicle price you see in the advertisements. | On-road price is the price of the vehicle that the buyer pays to bring the vehicle home, after paying all the registration fees, taxes and insurance. |
| Final Purchase Price | No | Yes |
| Amount | Always lesser than On-Road Price | Always higher than the Ex-showroom price |
| Cost | Cost covers only the vehicle price, excluding registration charges, taxes and insurance. | Cost is the sum of ex-showroom price, registration fees, insurance and taxes. |
What is Ex-showroom Price?
The Ex-showroom Price of a vehicle be it a car or a motorbike is the cost that does not include additional charges paid for vehicle registration at RTO, Road Tax and Insurance. The Ex-showroom price includes ex-factory cost, goods and services tax and vehicle dealer’s profit margin. It is the cost charged by the company for designing, manufacturing and bringing the car to the market for sale.
It is the price paid by vehicle dealers to procure the vehicle from the actual manufacturer. Thus, it is called the supply price of the vehicle.
Factors Influencing Ex-showroom Price
- Ex-factory charges: This is nothing but the manufacturing price of the car. This amount is paid by the car dealer to its manufacturer, for procuring the car.
- GST: Goods and Service Tax shortly known as GST is charged by the government.
- Dealer’s Margin: It is the Profit margin of the vehicle dealer which he wants to earn on the vehicle.
What is On-Road Price?
The On-Road Price of a vehicle, no matter if it is a car or a motorbike is the cost which a buyer has to pay for bringing the vehicle from the showroom to the road. Hence, it is called On-Road Price. It includes Ex-showroom Price, Registration fees, Lifetime Road Tax, Insurance and charges for accessories.
Factors Influencing the On-Road Price of Vehicle
Several additional charges included in the on-road price are mandatory. However, some are optional.
RTO Registration
The first thing a buyer has to do when he buys a new car or motorcycle is its registration at the Regional Transport Office. And without paying these charges the registration process is said to be incomplete. Moreover, the vehicle that you have purchased will be registered in your name in the vehicle registry, after registration.
Hence, after registration, you will be permitted to drive the car or motorcycle legally on road. If someone has not paid these charges, then a heavy fine would be imposed on that person.
Road Tax
The tax which the buyer has to pay for driving a new vehicle on the road. In other words, by paying the road tax, your vehicle gets legalized. It is chargeable as a percentage of the ex-showroom price of the vehicle, which generally ranges from 3 to 20 per cent.
Insurance
The Motor Vehicles Act makes it mandatory for all vehicles to have third-party insurance at least. According to this act, if a person fails to pay insurance, is liable to pay heavy fines for their vehicle. Generally, vehicle dealers have tie-ups with insurance companies, which facilitates the buyer to buy insurance. They can opt for third-party insurance or a comprehensive insurance policy. However, buyers can also choose any other insurer apart from the one suggested by the dealer.
TCS
TCS means Tax Collected at Source. It is a tax charged by the dealer on the sale of a new vehicle, which is one per cent of the Ex-Showroom Price. The buyer can apply for a refund at the time of filing the ITR.
Green Cess
A tax is charged to all vehicles which emit toxic gases into the environment. The amount of tax is used in making the environment greener, by using such methods that reduce carbon emissions. Electric Vehicles are not required to pay green cess, as they do not produce harmful gases.
Extended Warranty
Every product be it a laptop, smartphone, refrigerator or vehicle, all comes with a warranty. This warranty is limited to a certain period. But if you want it to continue for a long time, the buyer can opt for an extended warranty. The years may range from 3 to 7 years. It is completely optional. The buyer can deny paying additional charges in the name of an extended warranty.
Handling charges
It includes charges for taking the car from the warehouse to the showroom, petrol or diesel, number plate charges, car cleaning charges and so forth.
Annual Maintenance Charges (AMC)
If have visited any showroom for buying any electronic device or vehicle, you might have observed that the salesperson generally pushes you to opt for AMC. It includes basic servicing and maintenance of the items that you have bought. It is completely optional and you can deny buying AMC, as it only increases the on-road price.
Accessories
There is a big list of accessories which a person can buy for his new vehicle, which not just helps in preventing any damage, but also makes your vehicle stand out. When it comes to cars, mudflaps, accessories include seat covers, car pillows, mats, etc among other things. It makes your driving experience far better. On the other hand, when it comes to bikes, the accessories include helmets, flat kits, chain lube, spare tubes, bike cleaning supplies, etc. they often increase the price of the purchase.
Key Differences Between Ex-Showroom Price and On-Road Price
- Ex-showroom price is the cost that the car dealer pays to the manufacturer, for procuring the car, which includes tax paid to the state government, ex-factory cost and profit margin. On the other hand, on-road price is the price which the consumer pays to the dealer, for taking the vehicle home and driving it legally on the road.
- While ex-showroom price is the price of the vehicle without any road tax, registration cost and insurance. As against, on-road price includes ex-showroom price, registration, insurance, registration cost, green cess, TCS, cost of extended warranty bought (if any), annual maintenance charges (if any) etc.
- In simple words, the ex-showroom price is the vehicle price you see in the advertisements. Conversely, the on-road price is the final purchase price of the vehicle.
- Ex-showroom price is always lesser than the on-road price.
Conclusion
Above all, the on-road price is the total drive-away price of the vehicle. It includes all the additional costs plus the ex-showroom price. Further, while buying any car or motorbike, you should always take a moment and check the total price breakdown, so that you remain mindful of what you are paying for. Also, by doing this, you will have complete knowledge of the charges included in the vehicle’s total price.
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