Usually when shopping, you expect to pay no more than the recommended retail price (RRP) an item is listed for. Shopping for a vehicle can be different, as you’re typically required to pay on-road costs (ORCs) on top of the cost of the vehicle, which cover the costs to get the vehicle ready for the road.

What exactly are on-road costs?

On-road costs 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). In some cases dealers include extras, such as a full tank of fuel, a vehicle groom or servicing.

What should you expect to pay?

This normally depends on what you’re looking to buy and what the dealer includes as on-road costs. 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 the ORC - if the dealer is unable to provide this, you may be paying for unnecessary add-ons.

Fuel type also comes into the equation, as diesel vehicles must incur Road User Charges. These charges vary depending on the vehicle’s size and weight, but for a passenger diesel vehicle you’re looking at $76 per 1,000km (plus an admin fee).

If you are considering a Battery Electric Vehicle (BEV) it is worth noting that the light electric vehicle road user charge (RUC) exemption has been extended to March 31, 2024 so shouldn’t play a part in on road costing.

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 decided to contact several used car dealers across New Zealand and enquire about their on-road costs and what was included. To compare these costs, we looked at the popular Toyota Aqua Hybrid which cost between $8,000 and $13,000.

• Dealer A: $300 – includes 6 months’ registration, 6 month WoF, and a groom
• Dealer B: $350 - includes 6 months’ registration and 12 month WoF
• Dealer C: $500 - includes 6 months’ registration, 12 month WoF, and a full groom and polish

If you’re comparing similar makes and models as we’ve done, the price can sometimes vary depending on what the dealer includes in the ORC. Never be afraid to ask for exactly what’s included in the ORC.

Buying new

New vehicle dealers have a similar pricing structure, although this can vary between brands. We enquired about the ORC of three separate popular petrol models, each of which had a RRP of between $28,000 and $39,000.

The results varied, but they all included 12 months’ registration, a WoF and a full tank of fuel. The ORC ranged between $800 and $1,290. One of the dealers we spoke to said ORCs varied slightly depending on region.

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, 1,000km of road user charges are also included.

Next time you’re shopping for a new vehicle make sure you consider the price of the on-road costs as they affect the overall cost of a vehicle. 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 around what’s included in the on-road costs.

New clean car considerations

Another recent factor that may apply to ORCs is the Clean Car Discount scheme.

The goal is to make cleaner vehicles more attainable in New Zealand. In order to fund the programme, fees will be added to higher emission vehicles from January 2022. This may well cause a rush of sales between now and the implementation date.

The scheme offers the largest rebate of $8,625 for new Battery Electric Vehicles (BEVs) on the provision that they cost no more than $80,000 and have at least a three-star safety rating. New Plug in Hybrid Electric Vehicles (PHEVs) are also eligible for a rebate of $5,750. Used BEVs receive $3,450, and used PHEVs receive $2,300 providing they too meet the safety and pricing requirements.

Find out more on how the AA can help you when buying your next new vehicle:

• AA Money - aa.co.nz/money
• AA Insurance - aa.co.nz/insurance
• AA Mechanical Breakdown Insurance - aa.co.nz/mbi
• AA Car Reviews - aa.co.nz/reviews
• AA Running Cost Reports - aa.co.nz/runningcosts
• AA Preferred Dealer Network - aa.co.nz/preferred

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