If you are out in the Indian Automobile Market to buy a car then you must have heard about the term Ex-Showroom Price and On-Road Price and also might have wondered why there is a huge difference in both the prices.
Well, you see there are a lot of necessary and unnecessary costs that are added to the vehicle once it reaches the showroom. Some are the basic ones but majorly there are unnecessary ones that the showroom puts on to increase their profit.
If you are a potential buyer then this is one just for you as it will bust all the myths created by dealerships.
1. Ex-Showroom Price
This is the price many people have seen in the advertisements, this price is the one that includes the manufacturing cost. This is the cost at which the car has been manufactured along with GST and a bit of the dealer’s profit is included in this cost as well. The Ex-Showroom price does not include Insurance, Registration Charges and Road Tax. These are the necessary charges that one has to pay for the car and your car cannot come on the road without paying these charges. All these charges are calculated on the Ex-Showroom Price of your car itself.
2. Registration Charges
The first step after the Ex-Showroom cost is the registration charges. As you have seen that every car has a unique number plate. The fees incurred in the Ex-Showroom price is allocated towards the respective state RTO in which your car is going to be registered. This registration amount differs from state to state but this does not mean that you can buy your vehicle from the state where the tax is less as you need to have residence proof of that particular state in which your car is being registered. The car number has two initial letters which represent the state code (KA, DL, HR etc). Two unique numbers follow the letters which represent the area code followed by a series code and lastly the car’s four-digit registration number.
Sometimes the dealership adds extra costs such as number plate cover, smart card fees which are not necessary and you can deny paying for it.
3. Road Tax
This is the one-time tax you need to pay for your car and it is valid for your car’s life. The Road Tax percentage is calculated on the Ex-Showroom Price of your car ranging from 3% to 20%. The dealerships usually inflate these prices stating that they need to pay bribe or mediator fees. But be careful and don’t fall for this and check the road tax amount in your state before finalising it.
4. Green Cess
After a ban on Diesel Vehicles in Delhi NCR, the Supreme Court of India has imposed 1% Green Cess on vehicles above 2000cc. Be careful and do not pay this tax if you are buying a below 2000cc vehicle.
5. Tax Collected at Source(TCS)
This tax is calculated as 1% of the Ex-Showroom Price and it is levied by the dealership, this tax is imposed on vehicles above 10 lakh. However, this amount is credited back to the dealership account while filing the income tax. This tax was mandated by the Government of India for all the dealerships in June 2016.
6. Handling/Logistic Charges
You must strongly disagree to pay this amount as it is included in the Ex-Showroom Price but still dealers try to add this extra charge in the invoice. Collecting this charge from the customers is Illegal as per the orders of the Supreme Court of India but still, the customer has to be aware on their part as well.
In legal terms, your vehicle has to be insured before it goes on the road. But the insurance is only to protect you and your loved ones in case of any mishap. There are various kinds of insurance policies available. Starting from the third party cover, the policies go up to the Zero-Dep cover for your vehicle. The prices are also set accordingly so make sure you get the package that you have paid for.
8. Extended Warranty
This is a must-have add on as you get an extra cover when your manufacturer warranty gets over. Most of the manufacturers provide an option to increase your vehicles warranty and for that, you need to pay a cost of course. This too gets added to the ex-showroom price of your vehicle. We suggest that you should go for this one because you can negotiate with the buyer at the time of resale. This is an added plus point that will pay for itself at the time of resale.
9. Annual Maintenance Packages
The annual maintenance packages provided by the dealerships are not value-for-money to be honest because they are just a step to keep the customer glued to the dealership or the brand for the servicing of the vehicle. The services can be done easily at prices cheaper than they provide so buying an annual package won’t be a smart deal at all.
10. On Road Price
The ex-showroom price along with all the additional costs whether optional or mandatory form up the On-Road price of the vehicles. Ex-Showroom vs On-Road price confuses many because the on-road price comprises of many additional costs which confuse many car buyers.
This was all about the difference between the Ex-Showroom and On-Road Price of a car. Do let us know in the comments section below if we missed out on something.
Thank You, Readers