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How is On-road price calculated and what are the costs included in it?

Understanding the Difference: Ex-showroom vs. On-road Price 

When it comes to purchasing a vehicle, one of the important aspects that often perplexes potential buyers is the on-road price. This comprehensive figure includes various components, and a clear understanding is essential for informed decision-making. In this article, we will discuss the intricacies of how the on-road price is calculated and what costs are encompassed within it.

Ex-showroom vs. On-road price

What Constitutes the On-Road Price? 

The on-road price is the final amount a buyer pays to drive a vehicle out of the showroom and onto the road legally. It extends beyond the ex-showroom price, which is the cost of the vehicle without additional charges. The on-road price is inclusive of several elements, each playing a role in the overall cost.

  1. Ex-Showroom Price: 

The ex-showroom price is the starting point of the on-road price calculation. It represents the cost of the vehicle before factoring in taxes and other charges. Manufacturers set this price, considering production costs and profit margins.

  1. Road Tax: 

Road tax is a mandatory fee levied by the government for using the public roadways. The rate varies from state to state and is a significant component of the on-road price. It is crucial to know the applicable road tax in your region to calculate the final cost accurately.

  1. Insurance Premiums:

Insurance is a vital aspect of vehicle ownership, providing financial protection in case of accidents or damages. The on-road price includes the cost of insurance premiums, which depends on factors such as the vehicle model, coverage, and the buyer’s driving history.

  1. Registration Charges

Registration charges are fees paid to the regional transport office (RTO) for registering the vehicle in the buyer’s name. This is a legal requirement and contributes to the on-road price.

  1. Handling Charges

Dealerships often include handling charges, covering the expenses associated with preparing the vehicle for delivery. While these charges may vary, they are a part of the on-road price.

  1. Accessories and Add-ons

Buyers often opt for additional accessories or add-ons, such as extended warranties, alloy wheels, or special paint finishes. The cost of these extras contributes to the on-road price, and buyers should be aware of these potential additions.

How Is On-Road Price Calculated?

Understanding the calculation of the on-road price involves considering the base ex-showroom price and adding the various components mentioned above. The formula is straightforward:

On-Road Price=Ex-Showroom Price+Road Tax+Insurance Premiums+Registration Charges+Handling Charges+Cost of Accessories and Add-ons

By summing up these elements, buyers can ascertain the total on-road price, providing a comprehensive perspective on the financial commitment associated with purchasing a vehicle.


In conclusion, comprehending how the on-road price is calculated and what costs it includes is pivotal for individuals considering a vehicle purchase. This knowledge empowers buyers to make informed decisions, ensuring transparency in the pricing structure. Whether it’s understanding road tax implications or factoring in insurance costs, a thorough grasp of the on-road price provides a holistic view of the financial aspects involved in acquiring a new vehicle. Make sure to conduct thorough research, inquire about the specifics with the dealership, and be well-informed before embarking on your journey to own a new vehicle.

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