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Old 7th February 2012, 14:28   #31
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Default Re: Are "logistic" charges illegal?

Quote:
Originally Posted by tsk1979 View Post
almost all mfrs, have number plate/logistic charges added to the price. All dealers charge the same.
Now the question is, whether this is illegal in Delhi or all over India?
The Net Dealer Price which a dealer pays to buy the car from the manufacturer already has a transportation and logistics cost added to it. To illustrate this, am giving you a typical pricing structure break-up which will help understanding:

Typically a vehicle model pricing structure in India from manufacturer to dealer will go like this:

a) Assessable Value / Basic Price of Car & Variant in Question: Rs XYZ
b) Excise at 10% on assessable value
c) 1% NCCD (National Calamity Contingency Duty) on assessable value
d) Education Cess (0.3% of assessable value)
e) Additional excise (0.125% of assessable value)

Add all the above and you reach EX-FACTORY GATE Price

Now:

f) on Ex-Factory Gate Price
g) Add 10% tax
h) Freight charges (this is logistics & transportation)
i) Octroi / Entry Tax (if applicable for that particular state in india)
j) Transit Insurance

and you arrive at the NETT DEALER PRICE or NDP

k) On NDP you add
l) Add Dealer Margin (usually 3% of NDP for the volume OEM's)

you come to the SUB-TOTAL

m) on the SUB-TOTAL you add
n) Add state Value Added Tax ("xxx" %) of sub total
o) Add state surcharge ("xxx"%) on sub total

to reach EX-SHOWROOM Price

On Ex - Showroom Price you add:

p) ROAD TAX (for your vehicle model) for which you get a receipt from the State Govt
q) Registration charges (you get a receipt for this too from the RTO)
r) High Security Number Plate Charges (some states are charging this like Meghalaya, Sikkim, West Bengal etc - but you get a receipt)

gives your ON-ROAD price which you pay with your hard earned money to drive home your pride and joy

Anything else that you are asked to pay, (apart from accessories of course), and for which you do not get a receipt or not given a plausible, logical explanation is definitely questionable
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Old 7th February 2012, 15:51   #32
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Default Re: Are "logistic" charges illegal?

Quote:
Originally Posted by arjab View Post
The Net Dealer Price which a dealer pays to buy the car from the manufacturer already has a transportation and logistics cost added to it. To illustrate this, am giving you a typical pricing structure break-up which will help understanding:

Typically a vehicle model pricing structure in India from manufacturer to dealer will go like this:

h) Freight charges (this is logistics & transportation)
to reach EX-SHOWROOM Price

Absolutely correct break up.
Now, dealer generally picks up his lot of cars using a car carrier ( By road) or using drivers ( Driven).
The cost varies on the proximity of the dealer to the OEM distribution point based on his mode of transport. If its driven, the driver's per day cost would be around 200-300 on an average depending on the vehicle.
The truck load cost is an entirely different ball game which is generally controlled by the OEM's as per the distance.

However, some dealer's charge over and above this charge as logistics/ handling charges.
Most of the times, reason they give is , 'We need to handle the RTA' for instant registration of their vehicles.
Hence they charge it on end customer. (Unfortunately many people buy this reason and pay half heartedly).

AFAIK, there is no binding by Law on this money. We can strongly avoid this by driving our vehicle from the yard to RTA and Vice versa or if we can register our vehicle by ourself going to the RTA. Its a bit tedious/ time / patience consuming process though.
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Old 7th February 2012, 16:14   #33
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Default Re: Are "logistic" charges illegal?

Thanks for the detailed breakup of the pricing, Arjab.

Quote:
Originally Posted by arjab View Post
Now:

f) on Ex-Factory Gate Price
g) Add 10% tax
h) Freight charges (this is logistics & transportation) <-----
i) Octroi / Entry Tax (if applicable for that particular state in india)
j) Transit Insurance

and you arrive at the NETT DEALER PRICE or NDP
Is the Freight charges charged at this point a percentage of the car's cost, or is it fixed by the transportation guys at a fixed rate of per car transported/per km driven?

And the breakup means that we are already paying the Logistics/Transportation (from the factory to the dealership) in our OTR prices. It doesn't make sense to pay it twice, even on any sort of excuses which the dealer cooks up to tell us.

Quote:
Originally Posted by Maverick79 View Post
However, some dealer's charge over and above this charge as logistics/ handling charges.
Most of the times, reason they give is , 'We need to handle the RTA' for instant registration of their vehicles.
Hence they charge it on end customer. (Unfortunately many people buy this reason and pay half heartedly).

AFAIK, there is no binding by Law on this money. We can strongly avoid this by driving our vehicle from the yard to RTA and Vice versa or if we can register our vehicle by ourself going to the RTA. Its a bit tedious/ time / patience consuming process though.
So, if I am getting temporary registration done by the dealer and driving the car to my city where I will get it registered in my name, I don't need to pay these charges? (within the same state of course)

I am getting my City on the 29th of this month, and getting Temporary Registration done at the dealer's. I intend to register it at my city (300 kms from the dealership, which is at the state capital), and the whole RTO process will be done by me. Can I deny the dealer from paying the Logistics/Handling charges which he is charging me, and ask him to strike off the same? (He has quoted 4,500/- as Logistics in his quotation)
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Old 7th February 2012, 16:25   #34
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Default Re: Are "logistic" charges illegal?

Quote:
Originally Posted by Maverick79 View Post
...We can strongly avoid this by driving our vehicle from the yard to RTA and Vice versa or if we can register our vehicle by ourself going to the RTA. Its a bit tedious/ time / patience consuming process though.
Quote:
Originally Posted by RavenAvi View Post
So, if I am getting temporary registration done by the dealer and driving the car to my city where I will get it registered in my name, I don't need to pay these charges? (within the same state of course)
In Kerala, usually individuals do the registration & pay the taxes than the dealer doing it. But off-late, I see that even the dealers here [AVG Motors, Kottayam] have started charging "handling charges" for the last 1+ years. This was NOT there when I bought my car 3 years back. When I asked them about this, they said that this is the truck charges. The amount mentioned for SX4 is 2500/- and I have the quote still with me. Since the amount is small, I guess NOT many people question or complain. Also since I was aware that the dealerships in Bangalore charge almost 5000/- for every car under this, I thought this was introduced later & is genuine. I remember the SA from Advaith Hyundai telling me that the 5000/- was infact a bribe for the RTO guys.

Last edited by swiftnfurious : 7th February 2012 at 16:27.
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Old 7th February 2012, 16:40   #35
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Default Re: Are "logistic" charges illegal?

Nice posts. But I normally see logistic charges are levied over ex showroom price. What are these for? Driving from showroom workshop to showroom gate?
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Old 7th February 2012, 16:42   #36
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Quote:
Originally Posted by RavenAvi View Post
Thanks for the detailed breakup of the pricing, Arjab.



Is the Freight charges charged at this point a percentage of the car's cost, or is it fixed by the transportation guys at a fixed rate of per car transported/per km driven?

And the breakup means that we are already paying the Logistics/Transportation (from the factory to the dealership) in our OTR prices. It doesn't make sense to pay it twice, even on any sort of excuses which the dealer cooks up to tell us.



So, if I am getting temporary registration done by the dealer and driving the car to my city where I will get it registered in my name, I don't need to pay these charges? (within the same state of course)

I am getting my City on the 29th of this month, and getting Temporary Registration done at the dealer's. I intend to register it at my city (300 kms from the dealership, which is at the state capital), and the whole RTO process will be done by me. Can I deny the dealer from paying the Logistics/Handling charges which he is charging me, and ask him to strike off the same? (He has quoted 4,500/- as Logistics in his quotation)
Yes.You can deny. But, the dealer will try to bilk you saying that there would be so many legal complications and many other possible stupid reasons.
If you have the tax paid receipts and Invoice with you, you can move in the same state for a restricted time period. Pls check with your local RTA office online rules regarding the same. You can also check with the OEM's local sales representative for that region other than the dealer person.

Good Luck and hoping to see a thread on your experience soon.

Quote:
Originally Posted by tsk1979 View Post
Nice posts. But I normally see logistic charges are levied over ex showroom price. What are these for? Driving from showroom workshop to showroom gate?
Most of the time they are levied on the ex showroom price only.
It depends,

Case 1: When the Factory is in the same city, or at a drivable distance from the dealers Yard.
  • Driving from the Factory Yard to Dealer's Yard for storage.
  • When the vehicle is booked, driving it to the Octroi post and back ( if Octroi needs to be paid)
  • Then back to show room for delivery.
Case 2: When the Factory is in another state or at a non drivable distance in the same state.
  • Driving from Factory yard to the nearest loading point in a trailer/ truck.
  • Loading and unloading charges.
  • Tranportation charges. Typically 8 cars per trailer or 10 cars per trailer, depending on the size of the cars.
  • Again driving for necessary octroi if applicable
  • Driving between dealer's yard and show room for delivery to the end customer.
In addition to these, the dealers alos pay some fixed amount on a monthly basis to the RTA other than the regular fees which cannot be shown any where, hence they try to charge the same on the end user it self. Most of the times.

Now what really hurts me is, in both the cases, dealers are charging almost the similar amount. In the range of Rs. 3k to 5K depending on the vehicle size and model.

This is the way they earn over and above the commission / margin they get on each car/ vehicle they sell. Also, these commission/ margins are revised very frequently along with the price increase and also when every they form a cartel and demand the OEM's.

Last edited by Technocrat : 8th February 2012 at 00:59. Reason: Back to Back posts, merged
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Old 7th February 2012, 21:37   #37
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Default Re: Are "logistic" charges illegal?

Quote:
Originally Posted by Maverick79 View Post
This is the way they earn over and above the commission / margin they get on each car/ vehicle they sell. Also, these commission/ margins are revised very frequently along with the price increase and also when every they form a cartel and demand the OEM's.


MODS. Sorry for the back to back posts!
Why is it called ex showroom price. It should be ex factory, ex stockyard price.
Ex showroom is like MRP. Do you pay more for items produced far away(more than MRP?)

If a judge sets a precedent of FIR against VW, same can be done for other mfrs charging logistical charges after ex showroom price. Thats all I want to say
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Old 7th February 2012, 21:52   #38
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Quote:
Originally Posted by RavenAvi View Post
Thanks for the detailed breakup of the pricing, Arjab.



Is the Freight charges charged at this point a percentage of the car's cost, or is it fixed by the transportation guys at a fixed rate of per car transported/per km driven?

No, its not a percentage of car's cost. Its a fixed price paid by the OEM to the Transporter. It depends on the distance the transporter has to travel from the OEM to that particular state / dealer stockyard

And the breakup means that we are already paying the Logistics/Transportation (from the factory to the dealership) in our OTR prices. It doesn't make sense to pay it twice, even on any sort of excuses which the dealer cooks up to tell us.

Yep! You got it ! Unfortunately there is no legal law in India to denounce this. Many people have filed cases and these cases are disposed off on a "case-by-case" basis. There is no law preventing dealers from charging handling charges.


So, if I am getting temporary registration done by the dealer and driving the car to my city where I will get it registered in my name, I don't need to pay these charges? (within the same state of course)

I can bet on it the dealer will ask you for a "Temporary Registration Charges S'aar !! "

I am getting my City on the 29th of this month, and getting Temporary Registration done at the dealer's. I intend to register it at my city (300 kms from the dealership, which is at the state capital), and the whole RTO process will be done by me. Can I deny the dealer from paying the Logistics/Handling charges which he is charging me, and ask him to strike off the same? (He has quoted 4,500/- as Logistics in his quotation)
Strictly speaking you pay for only what the dealer can produce a receipt. That would be in my opinion: the RTO receipt for maybe 1000-1500 odd rupees. Balance he will not be able to produce: he will insist on giving you a "debit note" in which he will simply type - on dealer letterhead - Rs 4500 charged from Mr ABC on account of Registration and handling !

The entire mess happens because of the dealer's wanting to earn some extra money through the registration process.
The dealer commission on mass market models are so measly and over and above that the OEM siphons half of it off due to the various monthly "sales discount schemes" and the dealer is literally left with nothing !

Last edited by Technocrat : 8th February 2012 at 01:00.
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Old 8th February 2012, 13:05   #39
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Default Re: "Handling Charges" by dealers now disputed in court

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Originally Posted by scopriobharath View Post
I am actually Okay to pay the Incidental charges. If the people are not ashamed to take bribes / not doing duties at the proper time, I am not ashamed of paying bribes.

I checked with some dealers (Sorry cannot name them) and its the so called "Bribe" to pass all vehicles under that particular dealer. If you do not pay bribe, it seems, your vehicle would not be attended at all and the RTO folks tell to come the next day and the story repeats.

To avoid all hassles, they just pay up the bribe. Since they cannot /will not write the word bribe, they mention as incedental expenses. It is surprizing to know that incidental expenses also covers the fuel from the dealership to the RTO and back.

PLease note: I do not run any dealership / work for any. I work in an MNC and am purely white money salaried.
This is not case in Delhi. Dealers have the authority to self register on an online website and they are allotted the next number in their RTO series. So no visiting the RTO for bribes etc.
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Old 9th February 2012, 21:17   #40
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Default Re: "Handling Charges" by dealers now disputed in court

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Originally Posted by LastActionHero View Post
This is not case in Delhi. Dealers have the authority to self register on an online website and they are allotted the next number in their RTO series. So no visiting the RTO for bribes etc.
+1

Also, the dealer always jacks up RTO charges when charging from buyer.

So these incidental expenses are over and above Registration + bribe for that.
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Old 13th February 2012, 12:09   #41
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There should be a common MRP for cars and fuel across India like there is for all other goods. This, coupled with uniform taxation on vehicles and fuel will help the public no end!
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Old 13th February 2012, 23:06   #42
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Default Re: Are "logistic" charges illegal?

Quote:
Originally Posted by tsk1979 View Post
Why is it called ex showroom price. It should be ex factory, ex stockyard price.
Ex showroom is like MRP. Do you pay more for items produced far away(more than MRP?)

If a judge sets a precedent of FIR against VW, same can be done for other mfrs charging logistical charges after ex showroom price. Thats all I want to say
Exactly! Ex-showroom prices are like MRPs, and the dealers never include these charges in the final invoice copy.

About the charges being levied from the customer being used to bribe the RTO, even that doesn't really add up. Different dealers of different brands quote varying "incidental/transportation/handling/PDI" or whatever charges they like to call it. VW dealers being at the top of the list, atleast for sub 10lkh cars. A fiat dealer would quote approx 5000 for Linea and VW dealer would quote 15000, utilizing the brand name perhaps?

Some play smart by adding these charges to the Road Tax value or the quoted Insurance premium. Sad fact is that most of them who buy a new car are unaware of this cheating. And manufacturers show a blind eye to the matter. Perhaps easier for them as they dont have to increase the profit margin given to dealers. When questioned all the dealers fail to give any kind of logical reason. Great that the issue is being seriously taken up.
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Old 15th February 2012, 22:17   #43
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Default Volkswagen MD involved in Fraud

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New Delhi: A court here has directed Delhi police to lodge an FIR on a complaint against a top executive of Germany-based Volkswagen, directors of its authorised car dealer and a official of transport department on the issue of illegal charges levied on buyers.

Metropolitan Magistrate Rajinder Singh passed the orders for lodging FIR on a plea alleging that car dealers were levying charges like those for 'handling' in violation of law.

The complainant said that Central Motor Vehicle Rules and an August 2007 notification of Transport Department Delhi prohibits motor vehicle dealers from levying such charges.

"Looking at the scale and gravity of the allegation, it is deemed fit to direct the SHO concerned to register an FIR and investigate this matter. Accordingly, the SHO concerned is directed to register an FIR in accordance with law under the relevant sections," the judge said.

Full Article
Note from the Team-BHP Support Team : Do make sure that you provide the references/original source for every piece of material that has been taken from another website/publication, to give credit to the original author.

Last edited by Technocrat : 15th February 2012 at 23:01. Reason: Please read the note in your post, thanks
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Old 16th February 2012, 00:10   #44
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Default Re: Volkswagen MD involved in Fraud

It's been discussed here : http://www.team-bhp.com/forum/indian...al-charge.html
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Old 12th March 2012, 18:27   #45
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Default Re: Are "logistic" charges illegal?

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Originally Posted by tsk1979 View Post
Look at this news
Delhi Court directs lodging of FIR on plea against Volkswagen's MD - The Times of India

almost all mfrs, have number plate/logistic charges added to the price. All dealers charge the same.

Now the question is, whether this is illegal in Delhi or all over India?
Thanks Arajb & tsk1979.

My Dad has booked Maruti Wagan R - Lxi (CNG) yesterday with Maruti Suzuki Dealer in Faridabad. He has charged 4250/- as handling charges. I told him about Delhi Court order yesterday. SE told me this is not complete judgement. It is just Logging of FIR against Dealer and Company. Is this applicable in Delhi or all over India?
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