WLTP

Any vehicle registered before September 1 2018 is, in most cases, likely to have been tested and certified using the New European Driving Cycle (NEDC) test. Today, all newly-registered vehicles must be tested under the Worldwide harmonised Light vehicle Testing Procedure (WLTP).

While no one questions the need to reduce vehicle emissions, how this will be achieved through regulatory reform is less clear.

We examine what fleet managers need to know to successfully navigate this period of change.

This article will cover:

Why the regulation has been updated
What businesses and their drivers need to know
How Lex Autolease can help

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WLTP is the result of regulators realising that existing emissions testing was not keeping pace with driving technologies: there was a need to update testing procedures so they accurately reflected real driving conditions – and give the market a more accurate view of vehicle performance.

The challenge is to replicate exact driving conditions in a laboratory, so the WLTP test will be supported by a secondary process known as Real Driving Emissions (RDE), with step 1 affecting new car types from September 1 2017 and all car types from September 2019. Together, these tests will measure a vehicle’s fuel consumption, C02 and pollutants.

This is a significant period of change for the automotive industry and businesses looking to efficiently manage their vehicle fleets. The question of tax is crucial, as the transition to WLTP could increase company car benefit-in-kind tax.

This may mean, for instance, that employees could be incentivised to take a cash allowance instead of a company car, which – ironically – could undermine the government’s green agenda.

Not only can mileage compensation for private cars cost more, but grey fleets tend to comprise older, less efficient vehicles. The British Vehicle Rental and Leasing Association (BVRLA) has found that private cars used for work purposes tend to be on average 8.2 years old and emit 152g/km – much higher than the new WLTP benchmark of 110g/km.

As the new testing process is more rigorous, it is likely to result in a higher g/km CO2 value and it remains to be seen how governments – in the UK and Europe – will reform CO2-based taxation so it’s fairer and does not penalise more recent buyers.

While the Chancellor hinted prior to the recent Autumn Budget that Company Car Tax bands would be announced for 2021 and beyond, on the day this news was pushed back to Spring 2019, with confirmation that Company Car Tax and Vehicle Excise Duty will be based on WLTP data with effect from April 2020. For van drivers, new rates and bands based on WLTP emissions will be introduced with effect from April 2021. This means WLTP will continue to muddy the waters for businesses, as there is a lack of clarity around how the data will be used to determine Benefit-in-Kind rates.

The danger is that WLTP could make it appear as if CO2 emissions are rising, and with them penalties imposed by the government. This could deter businesses from investing in greener fleet vehicles, especially as cars from the old and new tests will be on the market offering different tax prices.

As of September 2018, all newly-registered cars must be certified according to WLTP – but uncertainty remains for fleet managers, as the application to commercial vans is one year behind cars. The change in CO2 monitoring impacts Benefit in Kind the most, which affects cars more than vans. As a result, there is uncertainty regarding the full impact on mixed fleets.

That’s why Lex Autolease is continuing to work with industry and government bodies to keep its fleet managers informed about the latest regulatory changes.

And, because we know it will take some time to understand the new emission testing regulatory system, we will continue to support our fleet managers to help them make informed purchase decisions, improve cost efficiencies and – in the spirit of WLTP – reduce their environmental impact.

Clearing the air on emissions regulations

How WLTP will change the automotive industry

The tax implications

What next for WLTP?

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