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Buying a new vehicle is a major milestone for many Indians. You finalise on your dream car, plan for months, know all its specs and details by heart, and keep checking online for new deals. Every time you spot a new advertisement of the car, your mind goes to your happy place – driving it out of the showroom. But guess what, the price displayed in advertisements is rarely the final amount you pay.
Buyers walk into a showroom expecting to pay one price, only to discover additional charges later. This confusion usually arises from not knowing the difference between ex-showroom price and on-road price. Many people are unclear about what they actually mean. Understanding this pricing difference can be crucial to avoid unexpected costs and to make a well-informed decision.
The ex-showroom price means the cost of a vehicle as listed by the manufacturer. It includes the ex-factory price, GST, and the dealer’s margin, but it does not include charges like registration, insurance, or road tax. In simpler terms, this is the price at which the dealer sells the vehicle to the customer, before any legal or optional add-ons are applied.
It’s also the price you’ll usually see in TV adverts, online listings, or promotional materials. For example, if a car’s ex-showroom price in Delhi is ₹7.5 Lakhs, this figure only covers the manufacturing cost, the profit margin for the dealer, the applicable GST, etc. It does not include other mandatory or optional charges you might have to pay.
The on-road price is the final amount you pay to drive your new car out of the showroom. It includes everything over and above the ex-showroom price — making it the true cost of ownership. This amount includes the registration fee (RTO charges), insurance, road tax, TCS (Tax Collected at Source), and any optional packages such as extended warranty, annual maintenance, or accessories.
So, if a vehicle’s ex-showroom price in Mumbai is ₹7.5 Lakhs, its on-road price could reach ₹8.5-9.5 Lakhs there or in any other city. This depends on the state where you buy and register the car, its insurance plan, chosen add-ons, etc. It covers all statutory and optional expenses necessary for legal ownership and use of the vehicle in India.
Understanding the difference between ex-showroom and on-road price is essential before finalising a car purchase. Here's a clear comparison to help you know where and how you are spending your money:
Aspect |
Ex-showroom Price |
On-road Price |
|---|---|---|
Definition |
Price set by the manufacturer, including GST and dealer margin |
Final price paid by buyer, including registration, insurance, etc. |
Includes |
Ex-factory cost, GST, dealer handling charges |
Ex-showroom price + RTO charges, road tax, insurance, etc. |
Excludes |
Insurance, registration, road tax, and optional add-ons |
Nothing; it is the total amount payable |
Variation Across Locations |
Slight variation due to dealer-level changes |
High variation depending on local RTO and insurance rates |
Displayed in Ads |
Yes |
Usually not displayed |
The ex-showroom price means the base cost plus a few fixed additions. Here are the main factors that influence this price:
GST (Goods and Services Tax)
GST on cars in India ranges from 5% to 28%, depending on the vehicle type. Cars with higher engine capacities attract higher tax slabs. This tax directly affects the ex-showroom price.
Dealer’s Margin
Every car dealer adds a certain profit margin to cover operational costs, staff salaries, and logistics. While this is usually standardised, it can differ slightly between dealerships.
Ex-factory Price
This is the price at which the vehicle leaves the manufacturer’s plant. It includes production costs, basic components, and factory-level logistics, but excludes taxes and dealer commissions. The ex-factory price is the foundation upon which the rest is calculated.
Several elements contribute to the final on-road price you pay for a new car in India. Understanding these helps you budget accurately and avoid surprises at the dealership.
Registration Charges
Registration is mandatory with the Regional Transport Office (RTO). Charges vary by state and depend on the vehicle’s price and category. The RTO issues the Registration Certificate (RC), which is proof of ownership. This fee is a significant part of the on-road price.
Road Tax
Road tax, levied by the state government, is calculated as a percentage of the ex-showroom price. Rates can differ across states and sometimes even within cities. For example, some states might charge higher rates for second-hand vehicles or specific fuel types. This tax is non-negotiable and must be paid upfront.
Tax Collected at Source (TCS)
If the ex-showroom price of a car exceeds ₹10 Lakhs, dealers collect 1% TCS on behalf of the government. This is an additional cost added to the on-road price.
Annual Maintenance Package
Some dealers offer annual maintenance packages, covering routine servicing for a fixed period. While optional, these packages add to the on-road price if chosen. They can be beneficial for peace of mind and predictable maintenance costs.
Extended Warranty
Manufacturers provide a standard warranty, but you can buy an extended warranty for added protection. This cost is optional but is often recommended for long-term reliability. It increases the on-road price if included.
Essential Accessories
Dealers may offer accessories such as seat covers, mats, or infotainment upgrades. While some are essential, others are optional. Choose only what you need, as these extras can inflate the on-road price quickly.
Insurance
Every car on Indian roads must have at least third-party insurance by law. Most buyers tend to opt for comprehensive insurance, which adds to the on-road price. The premium depends on the car’s value, location, and selected add-ons like zero depreciation or engine protection. Compare insurance quotes from different providers to potentially save on this component.
Getting a suitable on-road price is about smart choices and careful evaluation. Here’s how you can ensure you pay only what’s necessary:
Check Registration Charges
Ask the dealer for a detailed breakup of registration charges. These are non-negotiable, but you should verify the rates as per your state’s RTO norms. Ensure there are no hidden or inflated handling charges.
Evaluate Extended Warranty
Consider if you really need an extended warranty. If you plan to keep the vehicle for several years, it might be worth the extra cost. Otherwise, you can skip it to save money.
Select Accessories Carefully
Dealers often push accessory packages. Choose only those you genuinely need. You can buy many accessories later at a lower cost from trusted aftermarket sources.
Annual Maintenance Package
Review what’s covered in the annual maintenance package. If the package offers good value and covers essential services, it can be a smart choice. Otherwise, you can manage routine maintenance at authorised service centres as needed.
Look for Discounts & Offers
Always ask about ongoing discounts, exchange bonuses, or festive offers. Dealers may also waive certain fees or offer free accessories to close the deal. Comparing offers from multiple dealerships can help you get the lowest on-road price.
The ex-showroom price is influenced by the ex-factory cost, GST, and dealer margin. It excludes registration, insurance, and other charges that are added later to determine the total cost of the vehicle.
This includes registration charges, insurance, road tax, TCS (if applicable), extended warranty, maintenance packages, and accessories, making it significantly higher than the ex-showroom price of the vehicle.
Manufacturers usually fix the ex-showroom price, but dealers may offer cash discounts, exchange bonuses, or festive offers that effectively reduce the amount you need to pay.
Yes, the ex-showroom price includes Goods and Services Tax (GST), applicable as per the engine capacity, type, and vehicle size. However, it does not cover road tax, registration charges, or insurance premiums.
On-road prices vary across states due to differing taxes, RTO fees, and insurance costs. Since these are location-dependent, brands typically advertise the more standardised ex-showroom price instead.
This price includes additional compulsory and optional costs such as insurance, registration, road tax, and dealer add-ons, which are not part of the ex-showroom price, making the total higher.
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