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Breakup of Vehicle Pricing: From Ex-Factory Price to On-Road Price, Know How Much You Pay For A Vehicle

Buying an automobile for the very first time can turn out to be a confusing affair. There are a lot of price terms involved when you lookup for your favourite vehicle. As one walks into the retail showroom a number of price additions are incorporated, which might perplex some first-time buyers. The number of different prices and other terminology involved with an automobile might sound intimidating for a first-time buyer, especially when the difference between the ex-showroom and on-road price increases. This article will surely simplify things by simplifying the price terminologies and putting forward in the straight-forward term.

Price Terminologies/Breakup Of A Vehicle:- 

Price Terminologies/Breakup Of A car

1. Ex-Factory Price

The price which is paid by the dealers to the automobile companies is called as the Ex-factory price. However, this particular price term does not carry a lot of significance for buyers directly.

2. Ex-Showroom Price

If you have visited any automobile portal or have been through any vehicle launch related news article, this term will most definitely have flashed in front of your eyes. It can be defined as the total cost of the car when it reaches the showroom. It includes some of the price additions over the Ex-Factory prices. These price premiums include different price inclusions like handling, logistics and parking charges over the ex-factory price. 

Ex-Showroom Price = Ex-Factory Price + (Handling + Logistics + Parking)

  • Handling Price- The price incorporation involved with the handling and maintenance of vehicle at the showroom is called as the handling prices.

  • Logistic Price- The Price additions associated with the transportation of the vehicle from the factory to the showroom is called as the logistics price.

  • Parking charges- As the name suggests, this is the price associated with parking the vehicles before they are sold.

3. On-Road Price

on road price of a car

The final price that the buyers happen to pay just before taking the delivery of the vehicle is called as the On-Road Price. The number of price involvements between the On-road price and the Ex-Showroom price can be broadly classified into the mandatory price and non-mandatory price.

Mandatory Price factors

  • Insurance-These are mandatory charges and the buyers have the option of taking an insurance plan either from the automobile company or even from a third-party insurance company.

  • Registration charges- Even these charges are to be paid while buying, irrespective of the fact that buyer is opting for a permanent registration or even a temporary one for that matter.

  • TCS (Tax Collection at source)- These types of taxes are charged at purchase of vehicles which costs more than Rs. 10 Lakhs, (one per cent of the price).

Non-Compulsory Price factors

As the name suggests these are not mandatory and the choice of spending these amounts lie completely with the buyers

  • Accessories-The price that the dealers charge for the accessories definitely depends on all the auxiliary accessories the buyers are opting for

  • Extended Warranty- Again, the addition of these prices completely depends on the fact of whether or not the buyers want to avail the benefits of the warranties over extended time periods.

  • Road-side assistance- Like the other non-mandatory prices discussed above, even these are not mandatory and completely left at buyers choice.

On-Road Price = Ex-Showroom Price + Insurance +  Registration + Accessories +     Extended Warranty + Road-side assisstance