Ex-Factory vs On-Road Price: What You Actually Pay After Budget 2026

In social media brochures, car companies almost always mention the car’s ex-factory price. However, that’s never the actual cost consumers pay when buying a new car.

The real cost of a new car in Pakistan is the on-road price, which includes the base price, sales tax, levies, freight, insurance, registration, withholding tax, and other government fees.

The difference between ex-factory and on-road prices becomes important when new taxes or charges are introduced. After Budget 2026-27, any changes in GST, levies, or registration-related costs will affect the final amount buyers pay. 

What Is the Difference Between Ex-Factory and On-Road Price?

The ex-factory price is the starting point. The on-road price is the cost of buying and legally driving a new car in Pakistan.

Term	Meaning
Ex-factory price	The manufacturer’s listed price of the vehicle after the car leaves the factory.
Invoice price	The amount paid at the dealership after adding charges such as freight, insurance, and applicable levies
On-road price	The final amount a buyer pays after invoice charges and registration costs

What’s Included in the On-Road Price of the Car?

To sum it up, the on-road price includes three components:

• Ex-factory price
• Invoice price
• Registration charges

All these three components make up the On-road price.

Here’s the explanation of all three components:

Ex-Factory Price?

Ex-factory price is the first component in the on-road, company-announced car price, usually displayed in official price circulars and media headlines.

This price comprises three components:

Component	What It Means
Base price	The car’s base price from the factory. This is the vehicle cost before government taxes.
Sales tax	At present, petrol and diesel cars are subject to 18% or 25% sales tax, depending on the engine size. Hybrid and plug-in hybrid cars are subject to lower rates, such as 8.5% or 12.5%, while EVs and REEVs are subject to a 1% sales tax rate.
FED	Federal Excise Duty. This is applied to vehicles with engines, and the current rate is 5%.

When these three values are added together, you get the ex-factory price.

Invoice Price Comes Next

Then comes the invoice price, which is the total amount a buyer pays when the dealership hands over the car.

Invoice prices consist of these five components:

Component	What It Means
Ex-factory price	The company-listed car price, including base price, sales tax, and FED where applicable.
Capital Value Tax	Government tax, 1% charged on the ex-factory price.
Climate Support Levy	Again, a government tax ranging from 1% to 3% of the ex-factory price applies only to combustion-engine cars and HEVs.
Freight charges	The cost of moving the car from the factory or stockyard to the dealer’s showroom.
Freight insurance	Insurance that protects the vehicle if something goes wrong during transport.
Sales tax on freight and insurance	Sales tax is charged on freight and insurance costs.

These prices are mentioned in the invoice for the car. Some dealerships may also add documentation, handling, or other small charges. 

How Budget 2026 Would Affect Invoice and Ex-factory Price

In this year’s budget, coming this Wednesday, two on-road price components will increase:

• Ex-factory price for PHEVs, EVs, and REEVs
• Invoice price for Combustion Engines and HEVs.

How?

As per reports, the government is considering increasing GST on hybrids, EVs, PHEVs, and REEVs closer to the standard 18% rate. For context, it’s 8.5% or 12.75% for PHEVs and HEVs, and 1% on REEVs and EVs. This tax increase will raise the ex-factory price of all such powertrain vehicles. 

For combustion engines, there’s a proposed increase in the Climate Support Levy (a small tax charged by the government on the ex-factory price of the car) to three times. This increase in the levy will increase the invoice price for combustion engines and HEVs.

Example: How a Rs. 5 Million Car Becomes More Expensive

Here is a simple example to show how the final price can rise beyond the company-listed price.

Component	Estimated Amount
Ex-factory price	Rs. 5,000,000
Freight	Rs. 35,000
Freight insurance	Rs. 10,000
Sales tax on freight and insurance	Rs. 8,100
Registration and government fees	Rs. 120,000
Estimated on-road price	Rs. 5,173,100

Now add the Climate Support Levy.

Levy Rate	Extra Cost on Rs. 5 Million Car
1%	Rs. 50,000
3%	Rs. 150,000

This means a three-fold increase in the levy can add around Rs. 100,000 to a Rs. 5 million car, before considering any other tax or registration changes.

Registration Comes Last

This is the final component of the on-road price. After the car is invoiced and delivered, the buyer has to register it.

These charges are paid to the Excise department and include withholding tax, token tax, registration fee, number plate charges, and other small government fees.

Component	What It Means
Withholding tax	Tax paid at the time of registration, depending on the applicable government rate.
Token tax	Government tax is linked to vehicle registration and annual use.
Registration fee	Fee paid to register the vehicle in the buyer’s name.
Number plate charges	Charges for official number plates.
Other small fees	Minor government or processing charges linked to registration.

The Real Price Is the On-Road Price

For buyers, do not judge a car’s affordability by ex-factory price alone. Budget 2026 may affect different parts of the on-road price depending on the vehicle type, but the final impact will only be clear once the budget is announced on June 10.