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New WLTP testing regime causes indecision amongst company car drivers
The new Worldwide harmonised Light vehicles Test Procedure (WLTP) regulations took full effect this month amidst evident confusion in the fleet market, with drivers unsure about the correct choice of car, their future Benefit-in-Kind tax rates and the right powertrains to select.
Looking at the sales figures which have been depressed for some months, the new legislation has undoubtedly planted the seeds of uncertainty in the minds of company car users worried about what to order as their next new car and the future impact on their BIK tax bills.
The new WLTP regulations relate to all new cars registered from September 1 and from that date only WLTP-type approved cars can be sold in the European Union, including the UK.
The new regulations are intended to give a real-world account of the car’s exhaust emissions in realistic conditions – compared to the figures produced under the previous NEDC (New European Driving Cycle) regime which were originated in the laboratory.
However, the transition from old to new has not been without problems. Manufacturers are currently able to quote WLTP emissions values correlated to the previous NEDC testing system, before they must switch solely to WLTP values from April 2020. And they must start showing WLTP figures on all promotional material for their model ranges from this coming January.
However, many experts have identified at least a 10% increase in the CO2 emissions’ values under the NEDC-correlated WLTP values when comparing the old regime to the new, which could increase BIK tax bills. The BVRLA is lobbying hard to make the Government see sense on this.
That may be one explanation for sudden 23% spike in new vehicle registrations in August – typically a small month – as some vehicle manufacturers have rushed to register as many ‘old’ NEDC-rated cars as possible.
Figures from the Society of Motor Manufacturers and Traders show that the new car market rose by 23.3% in August to 94,094 vehicles registered. This included a 19.7% rise in fleet registrations to 50,157 and a massive 166% rise in registrations in the sub-25 business market.
However, from the start of this month, manufacturers have to test every variant of every model that they sell under the WLTP rules. This means a huge amount of activity is currently underway to ensure that as many vehicles as possible are tested under the new regime.
Many pundits expect there to be stock shortages as some manufacturers struggle to have all their models tested under the new regime. And it seems likely that some models may be dropped and the specification of others changed.
All of which serves to make it only more confusing for company car drivers about to choose his or her next company car, as they may find that the exact model they had been planning to order is no longer available or won’t be available for delivery for an extended period.
Drivers might also find that they have to select from a bundle of standard options rather than being able to create a bespoke specification.
Because so many European countries now used emissions-based tax systems, the European Union has introduced in a formula known as CO2MPAS to convert the new WLTP measurements back into something closer to the previous NEDC rating.
However, this formula still delivers CO2 emission figures that are generally accepted to be higher than those published under the old emissions testing system.
In the UK, HMRC has confirmed it will be using the CO2MPAS calculations to calculate BIK tax bills until April 2020 when pure WLTP figures are widely expected to be used.
This does raise some questions about the impact on drivers’ tax bills for cars that will be using the CO2MPAS conversion up until the date the change occurs. And the situation is further confused because HMRC has not provided BIK scale charges after the 2021 tax year – making longer term tax planning somewhat tricky.
The best advice for the moment that Fleet Alliance can offer to company drivers looking to keep BIK tax bills down is to choose a car that meets their requirements with the lowest CO2 emissions possible.
One option may be to consider choosing a new model from the ever-growing range of alternative fuel vehicles (AFV) available which are increasingly able to provide practical everyday transport linked to very low emissions.
Latest figures suggest that increasing numbers of drivers are starting to go down an AFV route, albeit from a very low base.
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