Date: February 14, 2015
Looking for buying New Car. Know Differences in between ExFactory, Exshowroom, On Road Prices of Cars in India
A Car like any other Standard Consumer Good is Sold in Stages involving Manufacturing - Distribution - Stocking - Retailing. However - while doing so - Car Prices Changed Substantially at each and every step. Here we will differentiate between Various Components of Car Pricing :-
» Ex Factory Price of Car: This is what the Manufacturer Price of the Car including there applicable margin and taxes (Excise Duty) as paid. Ex Factory Price is what is applicable for Car Dealer to pay to Manufacturer to lift the car from them.
In Net All ExFactory Price = Cost Price of Manufacturing + Manufacturer Margin + Excise Duty as Paid
Ex-Factory Price Terminology is very less been told or appraised to customer and rather is between the Manufacturer, Dealer and the Bank Whole Sale Funding Team who provides Inventory Funding to Dealers
» Ex Showroom Price of Car : Car Dealer Picks the Car at Ex-Factory Price and Sells it as Ex-showroom Price. Basically - Exshowroom Price of Car is the Price of Cost of Asset i.e. Car for Retail Customers including most Importantly Dealer Margins, Transportation costs and applicable VAT, State Entry Taxes and Octroi Charges. Its important to know that Cash discounts (if any offered) are deducted from Exshowroom Price of the Car
Exshowroom Price differ from State to State to tune of 1% to as high as 5% - Primarily due to difference in State VAT Charges and Entry Tax like Octroi.
Ex-showroom Price is called the basic price of the asset (i.e. Car only) and is exclusive of any registration, insurance or loadings
» On Road Price : On Road Price is basically the final Price Customer is Supposed to Pay to Owe the Car. It includes applicable Life Time Road Tax, Registration Charges, Mandatory Insurance, State Development Charges (if any), and the dubious dealer handling charges (aka Logistics Charges). Also, optionally will include Accessories cost, additional extended warranty coverage.
On Road Price is the final Price payable by the customer to the car dealer and is also known as Invoice Value of the car
Check Prices with Complete Features
» Dealer Handling Charges : Dealer claims handling charges in name of taking car from stockyard to showroom cost, basic fuel, stock maintenance, cleaning of car and as delivery charges.
The amount is quiet high and ranges from Rs. 6000 for a hatchback car to upto Rs. 35,000 for Luxury Segment Cars. The Amount is much dubious considering the high price paid for as Ex-showroom Price in itself means Price Paid for bring Car to Showroom. Still Dealers claim this amount over and above the exshowroom Price.
However, its something which is not unique to Indian Automotive market, but happens across most of the countries in the world - where dealer claims the amount as Handling Fees, Documentary Fees or even Vehicle Preparation Fees.
|Government Earning||Dealership Earning|
|Excise Duty - Charged to Manufacturer in Factory Price - 12% to 27% basis Engine Size, Body Length of Car||Fixed Margin on Exshowroom Price|
|State Entry Tax - Octroi Charges - Upto 4%||Commission on Car Loan Cases - 1.75% to 2.5% of Loan Amount|
|State VAT - 12.5% to 14.5%||Insurance Commission - 15% to 25% on OD Premium|
|Road Tax Charges Paid to State - 3% to 20% - basis Car Model, State Own Slabs||Very High Margin on Sale of Accessories - as high as 50% on Some Accessories|
|State Development Charges - Like MCD Parking fee in Delhi - Rs 2000 to 4000||Dealer Handling Charges - Rs 6000 to 8000 on Hatch, Mid Sedan. Rs 35000 on Luxury Cars|
Owning a New Car is not only Matter of Joy for Owner - but with huge amount collected as Taxes - surely bring Joy to Government Exchequer and Dealer Margins.
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