Ex-Showroom Price vs On-Road Price: Understanding the Key Differences

What Is the Ex-Showroom Price?

To explain in simple terms, the ex showroom price means the car’s total cost before consideration of the charges required for car insurance, road tax and RTO registration. It is the base or core cost of the vehicle that the showroom usually lists. Here’s everything else about the ex-showroom price of a vehicle that you should know:

1. The showrooms, as well as the maker, usually advertise the cars on their website, in newspapers, on billboards and in online ad spaces at the ex-showroom price.
2. The car’s ex showroom price includes its ex-factory cost, profit margin of the dealership and the Goods and Services Tax (GST).
3. The ex-showroom price doesn’t include the cost of RTO registration, insurance and road tax.

What Is the On-Road Price?

On the other hand, the on-road price of the car is the cost that represents the final or total sum of money that the buyer has to settle with the dealership to get full possession of the vehicle. In other words, the on-road price is the final cost of a road-ready vehicle. Here’s everything about the on-road price of a vehicle:

1. The on-road price is the sum total of the vehicle’s ex-showroom price, plus the cost of insurance, RTO road tax and vehicle registration.
2. The ex-showroom price is the base price of the standard vehicle. On the other hand, any accessories, insurance add-ons, or extra features you opt for on top will be considered under the vehicle’s on-road price.
3. To find ex-showroom and on-road prices of cars, you can get in touch with the local dealership.

What Does the Ex-Showroom and On-Road Price Include?

To help you understand the on road price and ex showroom price difference, here’s an explanation of what they include:

• Ex-showroom price of the car = Ex-Factory Cost + Goods and Services Tax (GST) + Dealership Profit
• On-road price of the car = Ex-Showroom Cost + Vehicle Registration Cost + Car Insurance Cost + RTO Road Tax + Other Charges (like additional accessories, FASTag, HSRP, extended warranty, hypothecation charges if purchased on finance, etc.)

Ex-Showroom Price vs On-Road Price: Key Differences Explained

Here is a more elaborate chart highlighting the difference between on road price and ex showroom price of cars in India:

On-Road Price Applicable for New Vehicles

Now that you know the difference between ex showroom and on road price, you should understand the various components included in the on-road price. Here are the terms you need to be familiar with:

Road tax

It is a mandatory tax, collected by the government from vehicles for their use of public roads. Road tax rates are not uniform and vary depending on the car’s ex-showroom price, engine capacity, vehicle class, fuel type and state of vehicle registration. The validity of this tax is usually for 10 to 15 years.

Vehicle registration

When you buy a car, it is mandatory to get it registered at the concerned RTO. By registering your car, it gets a unique registration number, Registration Certificate (RC) and number plates. Keep in mind that the car registration charges vary from state to state.

Car insurance:

The government has made it mandatory for new cars to be sold with long-term, 3-year, third-party liability insurance. Insurers often bundle this plan with a 1-year Own Damage (OD) cover for the first year. The cost of the OD component varies across insurers, but the cost of third-party insurance is fixed by the IRDAI. You can buy it from the dealership-partnered insurer or a different insurer of your choosing.

Tax Collected at Source (TCS):

If you purchase a car with an ex-showroom price of more than INR 10 lakhs, then you will have to pay the TCS. The rate is 1% of the ex-showroom price of the car.

Accessories:

The cost of additional accessories and optional features, such as floor mats, upgraded seat covers, upgraded infotainment system, etc., is also included in the on-road price.

Extended warranty:

If you choose to extend your car’s warranty beyond the standard, you will have to pay extra. This is optional, and its cost is included in the on-road price.

How to Calculate the Effective On-Road Price?How to Calculate the Effective On-Road Price?

By only opting for the essential items, you calculate and determine the vehicle’s effective on-road cost. This is how you can do it:

Essential costs

Vehicle registration, road tax and four-wheeler insurance are essential costs and non-negotiable. However, you may save some money if you get the car registered at the RTO yourself instead of getting the showroom to do it.

Insurance

While a 3-year, long-term third-party insurance is mandatory for new cars, the choice of going with the bundled OD plan and add-ons is yours. Extra coverage means extra premium, so choose wisely. Check out Jio Insurance Broking to browse, compare and buy/renew car insurance plans from reputed insurance companies in India.

Warranty extension

Only if you think you need the extended warranty based on your usage, then go for it. Otherwise, skip it to keep the on-road price low.

Accessories

Only opt for additional accessories and features that you actually need. They can be costly and drive up the car’s on-road price.

Offers and discounts

Try to negotiate the final price and make use of any available offers and discounts before the final payment.

Conclusion

Understanding the change from the ex showroom price to on road price is crucial for every car buyer. While the ex-showroom price is the base price of the vehicle, you can’t just pay it and have your new car ready for the road. To take it out of the showroom and drive it home, you need to do your due diligence and pay the on-road price, which is inclusive of the compulsory fees, such as car insurance premium, applicable road tax and vehicle registration costs.

Frequently Asked Questions (FAQs)