As well as welcoming in the latest ’68 number plates, last month also marked a much more serious change in the world of cars and vans. Acronyms are easily missed but the four-lettered abbreviation WLTP, standing for Worldwide Harmonised Light Vehicle Test Procedure, has been having quite an impact on individual personal contract hire (PCH) car leasing customers and fleets alike.
What is WLTP all about, what further changes are in the pipeline over the next two-to-three years, how will electric vehicles (EV) be affected in particular, and how much should the incomplete WLTP picture shape private motorists’ decisions and fleets’ policies?
Why was WLTP introduced?
Reliable data reduces disappointment, and the way cars were tested until the new WLTP test came along was unrealistic, the resulting CO2 and MPG figures misleading in so many cases, with sometimes sizeable gulfs often experienced between numbers quoted in marketing material and real-world fuel consumption.
The old-style test (called NEDC) was comprised a single cycle lasting 20 minutes, covering a distance of 11km, with simulated driving split into two phases (66% urban and 34% non-urban), and with an average speed of 34km/h, a top speed of 120km/h and fixed shift-points used for all vehicles.
The new WLTP test has everyday motorists in mind and heralds a much more realistic test for vehicles, albeit still carried out within the confines of a laboratory. The cycle now lasts 30 minutes over a distance of 23.25km, with average and top speeds of 46.5kmh and 131km/h, and 48% now apportioned to non-urban simulation, all reflecting facts such as modern cars typically being driven faster. Different gear shift points are now taken into consideration and, also importantly, vehicles’ optional equipment such as larger alloy wheels, climate control and panoramic roofs are included in the equation, which can all impact economy and emissions.
Key dates surrounding WLTP
September 2017 saw it become legally mandatory for completely new models, like Audi’s new A7, to be tested under WLTP. From this point onwards, some manufacturers chose to voluntarily work towards WLTP proactively and provided ‘correlated’ CO2 values based on converted NEDC figures using a system called CO2MPAS.
Various models have been dropped entirely, from Jaguar ditching ‘S’ variants from its XE and XF ranges, to Porsche turning its back on diesel, while production and availability of various plug-in hybrid electric vehicles (PHEV) like the BMW 3 Series 330e and VW Golf GTE were temporarily paused while the OEMs got their ducks in a row.
From September 2018, though, all new vehicles in terms of their age (so those sporting ’68-plate registration plates onwards) need to be tested and certified to WLTP standards even if their particular design ‘generation’ has been around for years.
The Hyundai i40, for example, has looked largely the same since it was launched in 2012 and, thanks to WLTP, even one registered with an ’18 number plate will attract cheaper tax than a brand new ’68-plate example, as the WLTP-tested car will have been assigned stricter MPG, CO2 and NOx figures and hence given a higher tax band.
Dealers were commonly required to show a definite gap between invoicing for and fitting options to vehicles, and August 31st 2019 is set to mark the last date of sale for cars without CO2 values assigned to their options.
New light commercial vehicles (LCV), or ‘vans’ as most people call them, also became subject to WLTP from September 2018.
Is WLTP all bad news financially?
WLTP needed to happen, to make things more realistic and transparent for private and business fleet motorists, fleet managers and other drivers, but CO2 and MPG typically worsening by around 20% on average still came as a financial sting to many.
In terms of real-world fuel economy, though, a large chunk of drivers haven’t noticed a difference, as actual vehicles don’t physically change even if their statistics do on paper, and numbers quoted in brochures have always been notoriously exaggerated, plug-in hybrids in particular often marketed with 3-digit MPG figures that are effectively impossible to achieve.
Fleet managers and budget-conscious personal contract hire (PCH) customers who put in research and make informed vehicle choices can unearth some pleasant savings post-WLTP, though. Benefit in kind (BIK) tax comparisons of various models’ former NEDC-derived CO2 values and their new WLTP figures can indeed illustrate a reduced tax burden as a result of manufacturers’ endeavours to reduce CO2.
Arval crunched a SKODA Karoq 1.6 TDI SE manual based on 20% income tax, for instance, and calculated a £278 3-year personal tax saving complemented by a £192 3-year Class 1a NIC saving. This reflected a 2g/km reduction in emissions, down to 118g/km CO2.
WLTP has a friend called RDE2
It’s all very well having modernised and improved vehicle tests carried out in labs, but on-road driving in the real world badly needed introducing – and indeed it has been, courtesy of another acronym called RDE (which stands for Real Driving Emissions). Introduced in September 2017 and mentioned in the Chancellor’s Budget, RDE tests involve physical measuring equipment attached to the back of vehicles.
RDE ‘Step 1’ formally becomes a legally mandatory requirement in January 2019 and will effectively mean that vehicles are still able to emit up to 2.1 times the level of harmful emissions out on the road as they do in the laboratory.
In June 2018, the media reported that all new diesel cars had failed to meet the latest RDE standards, with some vehicles an astonishing eighteen times over the ‘Euro 6’ limit. Petrol engines fared much better, though.
From January 2020 as part of the latest European ‘Euro 6d’ regulations, RDE ‘Step 2’ will kick in for all new vehicle types, lowering the allowed difference between lab’ and real-world driving emissions to 1.5 times the limit, applicable to LCVs as well as cars. A year later, RDE2 will apply to all vehicle types.
Manufacturers move to mitigate tax rises
In the meantime, a significant date in the automotive calendar is April 5th 2020 when car tax for all newly-registered vehicles will be based on their WLTP-derived CO2 figures. The government hasn’t provided much additional clarity around this, though.
Somewhat strangely, HMRC’s current company car tax regime already imposes a 4% BIK surcharge on diesels that don’t meet RDE2 standards, despite the official date being 18 months away, leading to inevitable suspicion.
Mercedes has received widespread acclaim in recent months for its efforts in developing genuinely clean diesel engines and has just announced that the all-new B-Class’ 2.0-litre diesel engine will meet Euro 6d standards, making it exempt from the 4% diesel surcharge. An interim status called Euro 6d-Temp exists, to confuse things further, and Vauxall’s latest 1.6-litre diesel engine meets this standard, given a helping hand by AdBlue and Selective Catalytic Reduction (SCR).
The future under WLTP, RDE2 and green lobbying
Diesel is widely regarded as rapidly dying, though, and although not all vehicles that drink from the black nozzle will be heavily hit by WLTP and the forthcoming RDE2 regulations, many company car and van fleets plus personal leasing drivers aren’t experiencing as much of a financial hike by switching to petrol or hybrid where possible. Having said that, the government has just announced severe cuts to the Plug-in Car Grant (PiCG) that will preclude several formerly popular hybrids, so the future’s far from straightforward.
For business and personal leasing customers requiring new vehicles, some bargain offers and deals are still to be found if going for a slightly ‘older’ albeit delivery-mileage 18-plate vehicle is palatable, and manufacturers are gradually refining their ranges to make CO2-affecting options less bewildering and their cars less greener.
Although WLTP unarguably dented car sales and leasing volumes this September, which would ordinarily be a peak month, the landscape will begin settling down and our contract hire team will be pleased to identify the right vehicles to meet individual circumstances.