What does On The Road (OTR) price mean?

If you're buying a new car, you'll likely come across the letters OTR when talking about the price. But what does that mean?

The On The Road (OTR) price represents the total cost to legally drive a new car away from the dealership. It encompasses not only the car's base price but also additional mandatory expenses, and is intended to ensure transparency for buyers. In this article, we'll explain what makes up the OTR price, and what it includes.

What does On The Road (OTR) price mean?

The components of the On The Road (OTR) price are:

• The car's base price
• Value Added Tax (VAT) at 20%
• First registration fee charged by the Driver and Vehicle Licensing Agency – currently £55
• Number plates – generally between £20 and £40
• The first year's Vehicle Excise Duty (road tax), which depands on the car's CO2 emissions
• Delivery charges for transporting the car from manufacturer to dealership
• Pre-delivery inspection (PDI) by the dealer to ensure the car meets quality standards
• A small amount of fuel often included by the dealer

Insurance is generally not included and will need to be arranged separately. 

The extra components on top of the car's base price can easily amount to several hundred pounds or more, depending on the model.

What does RRP and MRRP mean?

RRP stands for Recommended Retail Price, which is the price suggested by the manufacturer for the car, not including additional costs. MRRP stands for Manufacturer's Recommended Retail Price and is basically a different way of the same thing. 

The RRP and MRRP include the full price of the car including options, but not the extra components that make up the OTR price. 

What’s the difference between On The Road and List price?

The list price is often used interchangeably with RRP and MRRP, and refers to the car's base price without the extra fees that make up the OTR price. For example, a car with a list price of £25,000 could have an OTR price of £26,500 when including all the additional charges.

Can I avoid paying the OTR price?

The OTR price gives you as comprehensive cost overview, but there are scenarios where you could pay less. Many dealers are open to negotiation and could offer discounts or waive certain fees.

If you buy a second-hand car (or a pre-registered car), then you can often avoid some of the OTR costs, such as registration and number plates. However, you'll have the tax the car yourself.

Should you buy privately, rather than through a dealer, you'll avoid any of the charges associated with buying from a dealer, although you'll lose many of the protections provided by the Consumer Rights Act.