Understanding Ex Showroom Price and On Road Price of Vehicle

When you go to buy a car or a two-wheeler  at the showroom two prices would be quoted ex-showroom and on-road. The price you actually pay for the car is the on-road price, so you better look at that when making your decision. The on-road price exceeds the ex-showroom by around 10%, depending on the car model and the state in which you are buying it.

Prices associated with a car or motorbike

that the car prices in India vary from one state to another. The basic factors that contribute to car prices in any state are ex-showroom price, ex-factory rate, and ex-road rate.

Ex Factory Price of Car : is the price Car Dealer pays to Manufacturer to lift the car from them i.e it is the price at which a car manufacturer sells the car.  Ex-Factory Price Terminology is  not so common as  it is between the Manufacturer, Dealer

Ex Showroom Price of Car : Ex-showroom Price of Car is the is the price at which a car dealer sells a car to Retail Customers which includes Dealer Margins, Transportation costs and applicable Excise, State Taxes and Octroi Charges. Ex-showroom Price is called the basic price of the asset exclusive of any registration, insurance or loadings.

On Road Price : On Road Price is the final Price payable by the customer to the car dealer and is also known as Invoice Value of the car it includes State Registration Charges,  Life Time Road Tax Payment, Mandatory Insurance and the dealer handling charges (aka Logistics Charges). Also includes optional costs such as Accessories cost, additional optional warranty coverage. The discounts if any will also be shown and reduced while calculating the Net On Road Price.  Ex-road price refers to the price at which the buyer drives away the car.

What is ex-showroom price?

Ex-showroom price is the cost that the dealer charges for procuring the car from the manufacturer and the tax that it pays to the state government on procurement. The state government charges excise duty on cars. It is also known as the supply price of a car. In some states and cities, ex-showroom price may also include octroi tax. This is the tax collected by the local authority for bringing articles from outside the region for consumption in that region. Ex showroom prices differ from state to state. For instance, ex-showroom prices are higher in Mumbai or Bangalore than in Delhi.

What is on-road price?
On top of the ex-showroom price, one needs to pay a lifetime road tax, a registration charge, insurance charge that is renewed periodically and logistics charges. In short, on-road price is at which the dealer would hand over the keys of the vehicle to you. Typically the prices that are added are
  • Registration charges :  Registration is mandatory of every new vehicle. It is a unique identity of vehicle 
  • Life Time Road Tax :    Road tax, known by various names around the world, is a tax which has to be paid on a vehicle before using it on a public road.
  • Vehicle Insurance :also known as auto insurance, is insurance purchased for cars, trucks, motorcycles, and other road vehicles.
  • Dealer Handling Charges or Logistics charges: Dealer claims handling charges in name of taking car from warehouse to showroom

Difference between Onroad price and ex-showroom price for Hyundai as on Jun 2013 is shown below. Click on image to enlarge.

Hyundai From Ex show room price to road price

Hyundai From Ex show room price to road price

Similarly for Maruti as on Jun 2013 is shown below. Click on image to enlarge.
Maruti Suzuki Ex showroom to On road  price

Maruti Suzuki Ex showroom to On road price

What are Registration charges?
Registration is mandatory of every new vehicle. It is a unique identity of vehicle. Registration charges are cost to get the vehicle registered.
  • All motorised road vehicles are tagged with a registration or licence number in India. The licence plate (commonly known as number plates) number is issued by the district-level Regional Transport Office (RTO) of respective states
  • Plates for private car and two-wheeler owners have black lettering on a white background (e.g., TN 54 BB 0525). Commercial vehicles such as taxis and trucks have a yellow background and black text (e.g., KA 10 MA 8008). The current format of the registration index consists of 3 parts, They are
    • The first two letters indicate the state to which the vehicle is registered.
    • The next two digit numbers are the sequential number of a district. Due to heavy volume of vehicle registration, the numbers were given to the RTO offices of registration as well.
    • The third part is a 4 digit number unique to each plate. A letter(s) is prefixed when the 4 digit number runs out and then two letters and so on.
  • Registration charges differ from state to state. Within a state it differs based on cost of car, type of car (petrol or diesel)
  • Registration charges for various cars in different states can be found at ipaidabribe Vehicle Registration charges
Place Cost of Car Registration charges
Delhi  Upto Rs. 6 Lac Petrol Cars – 4%, Diesel Cars – 5%
Price between 6 Lac – 10 Lac Petrol Cars – 7%, Diesel Cars – 8.75%
Price > Rs. 10 Lac as Exshowroom Cost - Petrol Cars – 10%, Diesel Cars – 12.5%
+ MCD Parking Charges  Rs. 2000 for cars priced under 4 LakhRs. 4000 for rest of the vehicle
Karnataka (Bangalore, Mysore, Udupi) Karnataka has highest vehicle registration charges withminimum slab starts @ 15%
Price < 5 Lakh – · 15%
Price between 5 – 10 Lakh 16%
Price between 10 – 20 Lakh 19%
Price > 20 Lakh 20%
What is Life Time Road Tax
Road tax, known by various names around the world, is a tax which has to be paid on a vehicle before using it on a public road. Government charges road tax for road improvements and repairs.
  • The road tax imposed is subject to state government rules, traffic regulation etc. So it differs from state to state in India.Road tax  in Delhi is lesser than in Bangalore and therefore the car you buy from Delhi is priced lower than that you buy in Bangalore.Even within the state it is based on type of vehicle, cost of vehicle etc. In any state Road Tax for Maruti Swift is different from Hyudai i10, road tax for Hyudai i10 is different from Hyundai Verna and road tax for Hyundai i10 with 1.1 metallic color is  different from Hyundai i10 non metallic color.
  • Road tax for vehicles that cost less than Rs 4 lakh (two-wheelers and small cars) is around 4%-6% whereas it is between 7% and 9% in case of vehicles valued over Rs 20 lakh, Centre is likely to decide uniform lifetime road tax for cars, taxis and two-wheelers. The state governments have agreed to fix the tax at floor rate of 6% of the sale price before the value added tax (VAT).
  • It is usually paid once in life time of the vehicle in a state hence it is called as Life Time Road Tax. But If one shifts or relocates vehicle from one state to another state in one has  to re-register vehicle and pay lifetime tax again, based upon the depreciated value as assessed by RTO of the new state.  The value of vehicle diminishes year after year. Once the residual value of lifetime tax is paid, it is possible  of life-time tax paid in the earlier state on pro-rata basis, by writing to the earlier State’s RTO for the same. However, this is a manual process and therefore, it takes a lot of time before you actually get the refund
What is Vehicle Insurance?
Vehicle Insurance :also known as auto insurance, is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there from. A Car Insurance plan is  mandatory by law is compulsory for all foul wheelers. Different insurance companies provide different rates and types of insurance in different states.
What are Dealer Handling Charges?

Dealer Handling Charges or Logistics charges: Dealer claims handling charges in name of taking car from warehouse to showroom , basic fuel,the number plate charge, cleaning of car, sundry expenses as delivery charges. The amount is quiet high and ranges from Rs. 6000 for a hatchback car to upto Rs. 25,000 for Luxury Segment Cars. The Amount is much dubious considering the high price paid for. However, the charges are not claimed by dealers in India, but across most of the countries in the world as Handling Fees, Documentary Fees or even Vehicle Preparation Fees

Which price do banks consider?
When you buy a car through bank finance, these charges become important.  Usually private banks give loans up to 85% of the ex-showroom price, whereas government-owned banks offer up to 85% on the on-road price. However, these limits vary from bank to bank and also depend upon the creditworthiness of a customer. But it makes a difference to person buying the car. Suppose you want to buy a car which has an ex -showroom price of Rs. 5,00,000. To insure this vehicle you have to pay Rs. 18,000, and for the road tax you have to pay Rs. 4,000. Thus the total cost of ownership of this vehicle is Ex-showroom price plus insurance plus road tax, that is Rs. 5,22,000. So, if you get a loan from bank which gives you car loan on Ex-showroom prices you will have to pay the Insurance and Road tax from your pocket. If you get an On Road Price car loan you won’t have to pay this amount, instead it will be clubbed in your car loan.
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When you are searching for car online, you would find mostly ex-showroom price. Make sure you also check car ex-showroom prices in your state because car prices in India differ from one state to another. And find out the on-road price of the car. Some car based websites provide this information once you give your email,mobile number details. Do you think charges like Dealer Handling charges does not make sense.

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