JCT600 Vehicle Leasing Solutions blog
4th May 2018
Legislative News

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WLTP… Potential Considerations for your Fleet

As you may be aware all new cars registered after the 31st August 2018 must have been tested under the new WLTP (Worldwide Harmonised Light Vehicle Test Procedure). This will not apply to commercial vehicles.

However, there are a number of steps and changes over the coming months that you need to be aware of as they may well affect your company and your drivers.

  1. All cars built before 1st June 2018 will either have:-
    1. A CO2 rating based on the old NEDC (New European Driving Cycle).
    2. A CO2 Rating based on the new WLTP (if they have been tested) but converted back into an NEDC equivalent for BIK (Benefit in Kind) and VED purposes.
  1. All cars built after 1st June 2018
    1. Must have a CO2 rating based on WLTP testing and converted back to NEDC.
    2. If they have a NEDC only rating they must be registered by 31st August 2018.

It is expected that the Government will grant some form of derogation (exemption) on the old NEDC tested models. It is expected to be 20% of the previous year’s registrations. So if a manufacturer registered 20,000 cars in 2017 it would have 4,000 NEDC tested cars that would be exempt from the 2b rule above. It is expected that these vehicles will need to be registered by 31st December 2018. However, this is not yet confirmed.

All new cars (Not subject to derogation) registered after the 31st August must have a CO2 rating from the WLTP test. This will be converted back into a NEDC equivalent for the purposes of BIK and VED.

Why is this important to you, your company and your drivers?

  1. Many manufacturers will (or already have) shut down production of models that do not have WLTP testing completed presumably as they will not want to have too much untested stock that they will either have to register by the 31st August 2018 or make subject to derogation.

This means it is becoming increasingly difficult to place orders for vehicles, particularly factory build orders, which are due to be delivered from 1st September onwards. The manufacturers are just not accepting them. This needs to be considered when looking at replacement vehicles as drivers may have to wait longer for their new cars.

  1. Many models are not yet tested and with the test facilities in high demand may not for some months
  2. It is extremely difficult at the moment to ascertain if a particular model has or has not been tested under the new WLTP regime.
  3. If a vehicle is ordered now and the delivery date is after 31st August the CO2 Rating and MPG figures may well change. This could result in higher BIK for the driver, NIC for the company and a higher VED cost if it is moved into another CO2 VED tax banding.
  4. It is anticipated that most CO2 ratings once WLTP tested and converted back into NEDC will go up by as much as 20%+
  1. This may mean:
    1. your drivers may pick a car based on one CO2 only to find they end up paying significantly more tax or may want to reject the car.
    2. Your company pays more NI and VED costs.
    3. Your car policies (if based on CO2 data) will need to be amended.
  1. In addition some manufacturers appear to be deferring any new production to 2019 Model Year and will not comment on whether this will include general price increases

What can you do about it?

  1. There seems to be quite a bit of stock available at the moment. We would advise reviewing your required orders for the rest of 2018 and seeing if those can be brought forward. Your JCT600 Sales Manager can help you with this.
  2. Derogation will undoubtedly help but availability of certain models is bound to be limited. If your drivers are willing to be flexible on colour and trim levels there may well be some great deals to be done on current stock vehicles. Otherwise they may have to wait longer for the manufacturers to begin production again.
  3. We would strongly advise that you communicate to your drivers (and your business) what is happening and the possible affects particularly that the CO2, MPG, NI and VED figures may change from the quotation to the actual final contract and that we cannot guarantee orders can be fulfilled. We are more than willing to help you with this.
  4. We will make sure our driver quote system and all quotes we feel may be affected will plainly state that the figures may change and we will ask you on the order confirmation to acknowledge you understand this and wish to proceed with the order.

What else do I need to know?

Well some other dates that will probably be important.

  1. It is a recommendation that the actual WLTP (not the NEDC adjusted figures) become available from January 2019 but this is only a recommendation.
  2. By the 1st September 2019 all new vehicles must also complete the RDE (Real Driving Emissions) part of the WLTP test. At the moment it is still all laboratory testing. Its unclear if this will have a further impact on CO2 values or not.
  3. April 2020 is the proposed date that any link to the old NEDC is dropped and all BIK, NIC, VED will be calculated using WLTP (including RDE) only.

So, it is going to be a confusing period of time for everyone. Here at JCT600 VLS we will continue to update you with the facts and advise you as best we can on minimising the impact and risk to your company and your drivers.

 

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