When purchasing a car in Pakistan, many buyers are surprised by the difference between the “showroom price” and the “on-road price.” The showroom price might appear appealing, but it’s just one part of the final cost. The on-road price represents the total amount a buyer pays to drive the car legally on the road, encompassing various charges beyond the car’s base price. Let’s break down the differences between these two new car prices and understand what each includes.
1. Showroom Price: The Base Cost of the Vehicle
The showroom price is the price of the car as listed by the dealership or manufacturer. This price typically includes the base cost of the vehicle and excludes additional fees, taxes, and charges. This figure is often the one that attracts buyers, as it seems lower than the actual final amount.
Components Included in the Showroom Price:
- Ex-Factory Price: This is the manufacturer’s suggested retail price (MSRP) or the base price set by the manufacturer.
- Dealer Profit Margin: This is a small markup added by the dealership for profit, which is included in the price displayed at the showroom.
The showroom price can vary depending on the model, variant, and manufacturer’s pricing strategies. However, this price does not cover the additional costs required to legally drive the car on the road.
2. On-Road Price: The Final Cost to Drive Your Car Legally
The on-road price, as the name implies, is the total amount needed to get the car on the road. This price includes various charges that buyers must pay in addition to the showroom price to make the vehicle legally compliant and road-ready.
Key Components of the On-Road Price:
- Registration Fees: Every car in Pakistan must be registered with the relevant provincial or federal authority. Registration fees vary depending on the engine size and car type, and these fees can be significant for larger or luxury vehicles.
- Withholding Tax: In Pakistan, the government imposes a withholding tax at the time of registration, which can vary for filers and non-filers. This tax can add substantially to the on-road price, especially for higher-end models.
- Sales Tax and Federal Excise Duty (FED): Sales tax is typically added to the car’s base price, and Federal Excise Duty (FED) may be applicable depending on the vehicle’s specifications. These taxes increase the overall cost and are part of the on-road price.
- Token Tax: This is an annual fee based on the engine capacity of the vehicle, typically paid at the time of registration. It applies mostly to larger engine vehicles and varies depending on provincial policies.
- Insurance Cost: While optional, car insurance is highly recommended and is often included in the on-road price. Insurance premiums depend on the car’s value and coverage type and provide protection in case of accidents, theft, or damages.
- Additional Charges (Dealer or Documentation Fees): Dealers may add processing or documentation fees for handling paperwork, though this amount is generally minimal. It covers the dealer’s administrative costs related to completing the sale and registration.
- Optional Accessories and Add-ons: Many buyers opt for accessories like alloy wheels, upgraded sound systems, or seat covers. These add-ons can increase the on-road price and are typically chosen based on buyer preferences.
Example of Showroom vs. On-Road Price Breakdown
To illustrate the difference, here’s an example with a hypothetical vehicle:
- Showroom Price: PKR 2,500,000
- Registration Fee: PKR 75,000
- Withholding Tax: PKR 25,000 (for filer)
- Sales Tax and FED: PKR 150,000
- Token Tax: PKR 10,000
- Insurance Cost: PKR 50,000
- Dealer Fees: PKR 5,000
On-Road Price: PKR 2,815,000
In this case, the on-road price is PKR 315,000 higher than the showroom price due to the additional taxes, fees, and insurance. This example highlights why buyers should consider all costs when budgeting for a car.
Why the On-Road Price Matters for Car Buyers
For potential car buyers, the on-road price gives a more accurate picture of the total cost they’ll pay, ensuring no surprises when completing the purchase. While the showroom price can attract attention with its seemingly low cost, it’s the on-road price that reflects the actual financial commitment. Buyers should always inquire about the on-road price before finalizing a purchase and consider options like installment plans or financing, especially for high on-road prices.
Final Thoughts
Understanding the difference between showroom and on-road prices is essential for any car buyer in Pakistan. The on-road price accounts for all costs necessary to legally own and operate the vehicle, giving buyers a more realistic sense of what they’ll pay in the end. By being aware of these costs upfront, buyers can make better financial decisions, avoid hidden fees, and enjoy a smoother car-buying experience.