When shopping, you usually expect to pay no more than the recommended retail price (RRP) an item is listed for. Shopping for a vehicle can be different, because you’re typically required to pay on-road costs (ORC) on top of the price of the vehicle.
We often receive calls from AA members asking for more information about ORC, and what they should include.
What exactly are on-road costs?
These typically cover what is required to get the vehicle ready for the road when buying from a dealer (new or used). For all vehicles it covers registration and Warrant of Fitness (WoF), and for diesel vehicles Road User Charges (RUC).
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In some cases dealers include extras, such as a full tank of fuel, a vehicle groom or servicing.
What should you expect to pay for on-road costs?
This depends on what you’re buying and what the dealer includes as ORC. Apart from vehicle registration and WoF, there’s no set rule on what’s covered, nor is there a standard price. Make sure you ask the dealer for a breakdown of ORC; if the dealer is unable to provide that, you may be paying for unnecessary add-ons.
Fuel type also comes into the equation, as diesel vehicles must incur RUC. These charges vary depending on the vehicle’s size and weight, but for a passenger diesel vehicle you’re looking at $76 per 1000km (plus an admin fee).
With so many varying factors, some dealers have simply chosen to have a fixed charge regardless of the make/model and fuel type.
Buying used
We contacted several used car dealers across New Zealand to enquire about ORC and what’s included. To compare, we looked at the popular petrol Nissan Tiida costing between $6000-7000.
Dealer A: $595 includes 6 month registration, 12 month WoF and a groom.
Dealer B: $490 includes 12 month registration, 12 month WoF, 6 month mechanical insurance (to 10,000km), and 20 litres of fuel.
Dealer C: $350 includes 6 month registration and 12 month WoF.
If you’re comparing similar makes and models, the price can vary depending on what the dealer includes in the ORC. Never be afraid to ask for exactly what’s included.
Buying new
New vehicle dealers have a similar pricing structure, although this can vary between brands. We enquired about the ORC of three separate petrol hatchbacks, each of which had a RRP of between $29,000 and $36,000.
The results varied, but they all included 12 months’ registration, a WoF and a full tank of fuel. However, one included the floor mats as part of the cost, while another specified a pre-delivery inspection. The ORC ranged between $795 and $1290.
All-inclusive strategy
Some manufacturers like Toyota have ditched the ORC approach and have adopted an all-inclusive pricing strategy, which removes any room for negotiation on the sticker price. The benefit of this approach is that it allows the buyer to know exactly what they’ll end up paying for a vehicle if they choose to buy it.
This upfront, haggle-free price is called the Toyota Driveaway Price (TDP) as it includes the price of the car, all pre-delivery costs, WoF, registration and a full tank of fuel. For a diesel vehicle, 1000km of road user charges are also included.
Next time you’re shopping for a new vehicle, consider ORC as it affects the overall cost. This is especially important if you’re on a tight budget, as ORC can be the difference between spending a little bit less or a bit more on a vehicle. Remember, you’re the customer, so don’t be afraid to ask for some clarity.