Team AckoJul 22, 2021
Purchasing a brand-new car or a bike can be a dream for a lot of people. Some people plan their expenses meticulously so that they can buy a vehicle. Financing options such as loans also prove helpful in realising this dream. However, as a buyer, you need to be aware of the details that go into buying a car or a bike. And understanding the difference between a vehicle’s Ex-showroom Price and the On-road Price is important in this regard.
By going through this article, you will have the required knowledge to understand the meaning and difference between the terms: Ex-showroom Price and On-road Price. You will also come to know the different components that are taken into consideration to price a vehicle in India. The article ends with a Frequently Asked Questions and a Summary section for better understanding. Read ahead to know the different prices associated with a vehicle.
The Ex-showroom Price of a vehicle is the cost of a car or a bike without considering the charges paid for registering the vehicle at the Regional Transport Office (RTO), Road Tax, and Insurance.
Here are a few points explaining the meaning of Ex-showroom Price.
The three components mentioned above are vital to ride/drive a vehicle on public roads in the country. Not following the rules regarding these components can attract hefty penalties.
The Ex-showroom Price of a vehicle includes the ex-factory cost, Goods and Services Tax and the vehicle dealer’s profit margin.
It is the price at which the vehicles are usually advertised.
The On-road Price of a vehicle is the price you pay to bring the vehicle from the showroom to the road. Thus, it is named as the On-road price.
Here are a few points explaining the meaning of On-road Price.
It includes the Ex-showroom Price, charges for registration, road tax, and insurance, and any other optional charges.
For example, if you want your new car to feature some new accessories offered by the dealer, the dealer will add that cost to the vehicle’s final On-road bill.
You can browse the internet to find an Ex-showroom to On-road price calculator or simply get in touch with the vehicle dealer for it.
Here’s a table highlighting the key differences between the two prices.
|Ex-showroom Price||On-road Price|
|This is the price of the vehicle before factoring in the cost of vehicle registration, insurance, and road tax.||This is the price of the vehicle after factoring in the cost of vehicle registration, insurance, and road tax. It can also include other costs such as the cost incurred for the vehicle’s accessories.|
|A vehicle’s Ex-showroom Price is lesser than the On-road Price.||A vehicle’s On-road Price is higher than the Ex-showroom Price as it contains several additional components. (These components are explained in the next section).|
|The Ex-showroom Price of a vehicle is not its final purchase price.||The On-road Price of a vehicle is its final purchase price.|
The On-road Price of a vehicle is dependent on several factors. Some of these are mandatory while some are optional. For example, you need to pay the vehicle registration charges, insurance premium, and road tax; however, the amount paid for extra accessories, extended warranty, etc. is optional.
Example: Consider the following scenario. Mr A saw a television advertisement for his dream car. The promotional campaign described the car’s price to be INR 6 lakhs. Mr A was delighted as the amount matched his budget. He got excited and visited the car showroom with a huge smile on his face. However, his happiness did not last long.
The dealer informed him that the INR 6 lakhs was the Ex-showroom Price. The On-road Price of his dream car including registration, insurance, road tax and other services would come to INR 7 lakhs, which was beyond his budget. Unfortunately, he could not buy the car.
Make sure this does not happen to you by knowing about the vehicle’s actual price and planning your purchase accordingly. Here’s a list of additional components that are over and above the Ex-showroom Price of a vehicle.
Whether you buy a bike or a four-wheeler, it needs to be registered at the local Regional Transport Office (RTO). In most cases, the vehicle dealer does this for you and includes the incurred cost in the On-road Price. Such type of vehicle registration is mandatory by Indian law if you want to use your vehicle on public roads.
One can know of the state and the RTO where the vehicle is registered by looking at the number plate as it features the State Code (alphabetic code) and the RTO/Area Code (numerical code). The registration charges of the vehicle can differ from one Indian state to another. Also, you will have to pay extra if you want a special or a fancy registration number. The registration number is displayed on the vehicle’s number plate.
In simple words, it is the tax that the vehicle owner pays to use the vehicle on Indian roads. This kind of tax is calculated on the Ex-showroom Price of the vehicle; it is calculated based on a certain percentage. Usually, it is in the range of 3% to 20%. The validity of this payment is for ten to fifteen years.
The dealership charges 1% of the vehicle’s Ex-showroom Price as Tax Collected at Source (TCS).
This amount is also based on the Ex-showroom Price. The exact per cent might vary depending upon the prevalent government policy.
Also, read: Vehicle Scrappage Policy in India
Most new vehicles come with a certain warranty period. This is the manufacturer’s warranty. It is either restricted by time or the distance travelled. For instance, the warranty can be for one year or a fixed number of kilometres covered by the car.
You have the option to extend this warranty by paying extra. This cost will be included in the vehicle’s On-road Price. Such an extension can also be helpful for the vehicle’s resale value. A second-hand vehicle with a warranty is more valuable than a second-hand vehicle without one.
Your vehicle dealer might offer you an Annual Maintenance Package comprising vehicle cleaning, polishing, servicing, Roadside Assistance, etc. Check for double coverage; if your insurance policy offers Roadside Coverage then you do not need it from the dealer.
Go through the package details, compare them with other service centre’s plans and then make the decision. This is an optional package. If you choose to go with the dealer’s choice, the vehicle’s On-road Price will increase.
In most cases, the charges for transporting the car or bike from the factory to the dealer are covered in the dealer’s margin. If you want the vehicle to be transported to a particular location, then you can discuss it directly with the dealer.
Usually, when most vehicle users start using certain accessories, they become essential. For example, floor mats, seat covers, etc. can be termed as essential car accessories. You have the option to buy them for an extra cost from the car dealer or any other shop. If you buy from the dealer, it will reflect in the vehicle’s On-road Price.
You might like the eye-catching stylish biker jacket and the trendy helmet placed in the bike dealer’s showroom. You can buy these extra accessories by paying extra. For a car, you might want a better entertainment system. All of this will cost extra.
Vehicle Insurance is a mandatory requirement as per The Motor Vehicles Act. Failing to insure your vehicle and using it on public roads can attract hefty penalties. While insuring the vehicle is compulsory, you do have a choice when it comes to the insurance policy.
You have the option to buy a Third-party Policy or a Comprehensive Policy. The basic difference between the two is the ‘Own Damage’ cover that is offered by the latter. The ‘Own Damage’ cover insures your vehicle and also offers Third-party coverage, which is mandatory.
Vehicle dealers often have tie-ups with insurance providers. Make sure to go through the coverage and buy a policy that suits your needs. You can opt for a different policy or a different insurer as well.
If you opt for a Comprehensive Plan, your insurance premium will be higher. And ultimately, the to-be purchased vehicle’s On-road Price will be higher.
If you buy add-on coverages, the insurance premium will rise and so will the On-road Price.
If you find that the insurance coverage offered by the vehicle dealer is inadequate or expensive, you can seek another insurance provider. Lower insurance expenditure will lower On-road Price. However, do not compensate on the insurance coverage to reduce the price.
The dealer might try to sell you several products/services, which will increase the On-road Price. However, you have some control over the On-road Price of your new vehicle. You can listen to the dealer’s sales pitch but make sure to make an informed decision. Buy only those products/services that are suitable for you. Here are some points to keep in mind while finalising the On-road Price of your new vehicle with the dealer.
Registration charges fall under necessary expenses. However, you can save money here by not going for fancy numbers. Note that you have to pay a hefty sum of money for such numbers.
Think about the vehicle’s usage before paying to extend the vehicle’s warranty. If the warranty is based on the number of kilometres, then try to gauge the time you will take to cover those kilometres before paying for the extended warranty.
Going in with a fixed budget in mind will be helpful to ensure an effective On-road Price. Accessories, essential or otherwise, are attractive. You might feel tempted to splurge on them. But the questions to ask are: do you need them and do they comply with your budget.
This also boils down to the usage. A car that is driven every day and is used for frequent road trips and off-roading needs extensive and regular servicing as compared to a car that is just used on weekends. Think about the vehicle’s usage and then decide if you want a yearly servicing package from the dealer or is it beneficial for you to pay-per-service to a different service centre.
Some dealers offer exclusive discounts on vehicles purchased from their showroom. Look out for such deals and get the best On-road Price for your new vehicle.
Vehicle dealers often come up with seasonal offers. They can offer discounts or package deals on such occasions. Such offers are usually seen during festivals. For example, Diwali offers, new-year deals, etc.
Whether you are going ahead with the policy offered by the vehicle dealer or have decided to opt for one directly from the insurer, you need to buy only suitable coverage. There is no point in simply buying all kinds of coverage when you know it is of no use. For example, if you drive alone, a Passenger Cover is not going to be useful for you.
Here are some key points that summarise the sections covered in the article.
Ex-showroom price is lesser than the On-road Price.
Ex-showroom Price does not include the expenses made towards registration, insurance, and road tax.
On-road Price of a vehicle depends upon the type and extent of products/services you avail from the vehicle dealer.
Vehicles are usually advertised based on their Ex-showroom price.
On-road price is the final cost you incur to buy a vehicle from the dealer and drive it on public roads in India.
The following section will help you with answers to some common questions related to Ex-showroom and On-road prices of cars and bikes. If you have specific queries, make sure to seek answers by contacting your vehicle dealer before buying the car or bike.
Can I buy car insurance from a different insurance company than the one suggested by the car dealer?
Yes, you have the option to modify the dealer-offered plan, choose a different one, or all together switch the insurance provider. You can buy car/bike insurance online by visiting acko.com.
Will the car dealer help me to get my Driving License?
The car dealer will mostly not help you to get your Driving License. You will have to approach your local Regional Transport Office (RTO) for it.
Do I need to hire an agent to register my car at the RTO?
Usually, car registration is managed by the vehicle dealer. You do not need to worry about it.
Will my dealer offer a discount if I pay the bulk of the amount in cash?
You will have to discuss this specifically with your car dealer. However, make sure to make all payments as per the law.
Can a car’s On-road price vary from one showroom to another?
Yes, two showrooms can have different On-road prices as these prices are based on several optional products and services.
How to arrive at a vehicle’s Ex-showroom Price and the On-road Price?
The Ex-showroom Price is usually inclusive of the vehicle’s ex-factory cost, the applicable Goods and Services Tax and the vehicle dealer’s margin. The On-road Price is over and above the Ex-showroom price and includes essential expenses such as charges paid for registering a vehicle, purchasing insurance, and paying road tax.
The On-road Price also includes optional purchases such as extra accessories, maintenance packages, etc. You can calculate these prices based on the mentioned parameters. Several websites can assist you with an approximate Ex-showroom and On-road Price of a vehicle. For specific requests, you can contact the vehicle dealer.
Why is it that a vehicle is usually more costly than what it is advertised as?
The advertised price of a vehicle is usually the Ex-showroom Price. Whereas, the actual cost paid to bring the vehicle on road is the On-road Price. Since you must pay the On-road price, which is higher than the EX-showroom price, the final cost of a vehicle is higher than what is advertised.
Why is it that in most cases the On-road Price of the vehicle is not advertised?
The On-road Price of a vehicle is based on the choices of the customer. You can choose to buy accessories, choose insurance with multiple add-ons, consider a fancy registration number, etc. All of this will increase the On-road Price. Thus, this price is subjective. Whereas the Ex-showroom price is similar across locations, making it easier to be picked up for advertising.
Is it possible to get a discount on the vehicle’s Ex-showroom price?
It is unlikely that you will get such a discount. However, you can get a discount on a vehicle’s On-road Price. Vehicle dealers often offer seasonal discounts and have contests to promote their vehicles.
I like a car and I want to purchase it. How can I find its approximate On-road Price?
Please speak to the vehicle dealer regarding the approximate On-road price. You can also get to know the specific price if you discuss with the dealer about extra accessories, maintenance packages, etc. This will help you to make financial arrangements to purchase the car.
What is a Registration Certificate and a Smart Card RC?
A Registration Certificate is given to the car owner by the Regional Transport Office where the vehicle is registered. It is also known as RC. The RC can be viewed as a document that denotes vehicle ownership. When the RC is issued in the form of a Smart Card, it is known as a Smart Card RC. The Regional Transport Office issues a Smart Card RC if it has the necessary infrastructure for it. Otherwise, it is issued in the form of a booklet or a sheet of paper. Usually, the vehicle dealer arranges for it in case of a new purchase.
Is it alright if I do not buy the extra accessories and servicing package from a dealer?
Yes, such services are optional. You can choose not to buy them from a dealer, consider another shop, or not buy them at all. If you are buying them, compare the features and prices of the available options and then decide.
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