A Quick Guide To WLTP (Worldwide Harmonised Light Vehicle Test Procedure)
WLTP | The Background
Against the background of several emissions scandals, the way in which vehicle emissions are tested has changed. A far more rigorous and comprehensive test is welcome to assist purchasers with the vehicle selections they make. The move from New European Driving Cycle (NEDC) to Worldwide Harmonised Light Vehicle Test Procedure (WLTP) started in September 2017.
Some of the changes in the testing regime can be found in the image below. For a full list of changes please go to http://wltpfacts.eu/from-nedc-to-wltp-change/
Whilst new vehicles are already being tested under the WLTP system the NEDC equivalent is also being recorded. In effect vehicles will have two emissions profiles for an interim period. Importantly for company car drivers the company car taxation will continue for the time being to be based on NEDC. It is likely that from April 2019 the new regime will be used for taxation purposes.
What does this mean for company car policies?
If initial test result differences are a sign of things to come, then emissions have generally been understated, and in some cases, they have been understated by a lot! This means for organisations who rightly base their vehicle policies on whole life cost (WLC) or total cost of ownership principals (TCO), vehicles will look more expensive. Manufacturers of those vehicles particularly badly hit will struggle for volume and challenge profitability levels.
Employees are likely to see a significant downgrade in vehicle selection once the tax changes to a WTLP basis. What can therefore be done between now and Spring 2019 to help offset these challenges?
- Keep reviewing and refining current car choice lists; including regular manufacturer updates to ensure support terms assist in maintaining choice levels
- Consider delaying replacing current cars (either via informal or formal extending current leases) until further clarity is provided
- Consider utilising short-term hire cars to mitigate problems ordering vehicles
- Most importantly, be prepared for a full review of Car Policy when the full impacts become known
The impact of the WLTP changes and subsequent government announcements on BIK are likely to be significant. Continued stabilisation actions are required to ensure car choices remain appropriate. We recommend fleets start preparing for a full review of Car Policy review, to include stakeholder alignment, future business objectives, review benefit requirements and communication plans. This will ensure you are prepared for the changes and help ease the pressure on your organisation and employees once the impact of these changes is fully known.
If you would like some support addressing the impact of WLTP on your fleet policy or purchasing decisions then please