Discover the IFMI Digital Masterclass about WLTP: Fleet costs will increase

WLTP and correlated NEDC - we've all heard these acronyms. But what do they mean? And how will they affect fleet policy? That's what the latest Digital Masterclass wanted to find out, an initiative of the International Fleet Managers Institute  (IFMI) that has been organising exclusive seminars and webinars for fleet industry professionals.

What is WLTP?

Nicolas Michel, Senior Consultant at Arval, gave a short introduction on the Worldwide harmonised Light Vehicle Test Procedure or WLTP. It replaces the out-of-date NEDC, an older test procedure for new vehicles. As was the case for NEDC, WLTP is a laboratory test, but it is designed to give more realistic results. The test defines values for a vehicle's fuel consumption, CO₂ emissions, pollutant emissions (e.g. NO_x) and, for alternative powertrains, energy consumption and range.

From 1 September 2018, new cars need to be tested according to WLTP. One year later, old cars will need to follow.

There are still differences between WLTP lab tests and real world emissions. In large part, these are attributable to factors that cannot be taken into consideration during lab tests: tyre pressure that is too high or too low, vehicle load, traffic conditions, road gradient, weather conditions. And then there's driver behaviour...

As if WLTP itself wasn't complicated enough, there are also RDE tests. RDE, short for Real Driving Emissions, measures emissions while a car is driven on the road.

Changes

Marc Van Eck, Senior Business Development Manager at ALD Automotive, presented a series of concrete changes after the introduction of WLTP.

As many manufacturers are still performing WLTP tests for many of their vehicles, WLTP values will be converted back into an NEDC-correlated value during a transition period in order to avoid comparing apples and oranges. The NEDC-correlated value will be 10% higher than the NEDC.

A major change is that cars won't have a single value per model or version as the WLTP value depends on the actual options or equipment fitted on a car.

Mark Pecqueur, research developer at Thomas More university college and independent expert on engines and vehicles, gave a short introduction into the technical aspects of WLTP, including an explanation on how the higher WLTP CO₂ values are attributable to the more intense tests that use more power.

Taxation

Nicolas Michel the implications WLTP has on consumer information, car labelling and especially on taxation.

Most European member states apply some sort of CO₂ tax to the registration and/or ownership of cars. These are based on the CO₂ values issued from the laboratory tests which are very likely to be higher under WLTP rules. However, the European regulator has announced that the move to the new WLTP test should not have a negative impact on vehicle taxation. In spite of this stance, it remains to be seen if and when national governments will adapt their taxation systems. An increase in vehicle taxation is therefore likely, at least during a transition period.

Nevertheless, this tax hike might be offset by the European requirement for carmakers to reduce their emissions to 95g/km on average by 2020.

Arval carried out a case study for a fleet of 400 vehicles in 6 European countries. The impact on yearly charges for all six countries combined was between 0.5 and 3%. Individual countries could see increases up to 8%. The impact on benefit in kind will be along the same lines.

The impact on vehicle taxation will be felt most heavily in the Nordics (Finland, Sweden, Denmark), France and the Netherlands.

Four scenarios

ALD's Marc Van Eck gave four possible scenarios for car policies during the transition period. As there is still much uncertainty about the new WLTP values, companies can choose to anticipate renewals and pick cars with old NEDC values. They can also freeze orders until more information becomes available. A third option is to anticipate with early terminations to avoid additional costs linked to increasing CO₂ values. Lastly, companies can prefer to define alternative powertrain scenarios to alleviate the impact of WLTP. A combination of a number of these scenarios is of course also possible.

Fer Derwort, European Fleet Manger, Infor, ended the webinar with his views on this transitions. He agreed that the best course of action is to wait until more information becomes available, probably by Q3 2018. In the Q&A following his presentation, he said that the current transition might be the ideal moment to consider alternative powertrains.

You can watch the full and more detailed webinar below or on our YouTube channel.

Next IFMI Masterclass

You can register now for the next IFMI Masterclass. It takes place on 27 September 2018 from 2pm to 2.45pm and will present a roadmap to electrifying your fleet. Sooner or later, your fleet will adopt plug-in hybrids and electric vehicles. But how do you prepare for this transition and what tax benefits can you expect? Our experts will explain this and more during this essential webinar.

Watch the recorded masterclass

Image: car undergoing emission testing