What does WLTP mean for your fleet: An update February 2020

Venson Automotive Solutions, almost two years ago, published a white paper on the impact of the introduction of the Worldwide harmonised Light vehicles Test Procedure (WLTP) on fleet operations.
 
Over the intervening period, WLTP has become an acronym that, in many ways, has come to haunt fleet decision-makers and company car drivers alike.
 
The white paper, ‘What does WLTP mean for your fleet’ outlined the new carbon dioxide (CO2) emissions and MPG testing protocol, which replaced the long-established New European Driving Cycle (NEDC) vehicle testing procedure, and what its effect would be on the fleet industry and, particularly, company car choice lists.
 
Critically, from April 1, 2020 for Vehicle Excise Duty and April 6, 2020 for company car benefit-in-kind tax the transition period to a wholly WLTP-based emission regime for calculating both taxes ends and fleet operators and company car drivers remain bewildered by a lack of comprehensive data from many motor manufacturers.
 
To counter higher CO2 emissions under a more ‘real world’ WLTP testing regime, the Government allowed for a transition period that saw figures obtained converted back to a comparable NEDC values, known as an NEDC-correlated figure.
 
That measure effectively sheltered fleets and company car drivers from higher taxes. But with the transition period coming to an end, the “seismic” impact that WLTP was described as having on the motor industry, including fleets, continues.
 
In publishing new company car benefit-in-kind tax rates following an in-depth review, the Government said respondents provided data showing increases in CO2 values ranging from 7% to 40% as a consequence of testing under WLTP rules. On average, WLTP results were about 20%-25% higher than NEDC figures with cars with smaller engines, and lower emissions, impacted the most and diesel cars slightly more than petrol models.
 
The reality of that is company car benefit-in-kind tax and Vehicle Excise Duty is higher in most cases as a result of WLTP testing than under the previous NEDC regime.
 
Now, with just weeks to go before the new benefit-in-kind tax and Vehicle Excise Duty regimes are introduced, fleet operators have been urged to review company car choice lists as motor manufacturers are struggling to provide accurate vehicle CO2 emission figures.
 
Company car benefit-in-kind tax for all new cars registered from April 6 will be based on CO2 emissions figures calculated under WLTP - cars registered prior to April 6 will continue to use CO2 figures based on the previous NEDC protocol.
 
Additionally, for newly registered cars from April 1, Vehicle Excise Duty rates will also be based on WLTP CO2-achieved emission figures. Cars registered prior to that date will continue to use existing NEDC CO2 values.
 
Since September 2018 all new cars have had to be tested under WLTP rules - for all new car models requiring a new type approval number from September 2017. However, the British Vehicle Rental and Leasing Association (BVRLA) has warned that a “continued shortage of reliable data” threatened to disrupt the move to new company car benefit-in-kind tax and Vehicle Excise Duty regimes.
 
The BVRLA, of which Venson Automotive Solutions, is a member, said “many vehicle manufacturers” were struggling to provide WLTP data for their cars. The Association claimed that member organisations currently only had accurate CO2, electric mileage range or related Real Driving Emissions Step 2 (RDE2) compliance (latest NOx emissions standard) information for around 80% of base (pre-option) models.
 
Crucially, with the April switch to company car benefit-in-kind tax and Vehicle Excise Duty regimes based on WLTP emissions, the impact of optional equipment is included in a vehicle’s quoted CO2 figure. Previously, the NEDC regime did not take account of extras - only wheel size, number of seats and transmission type were accounted for - and the NEDC-correlated emission figures stripped out the impact of optional equipment.
 
With average lead times for cars at around nine-12 weeks from ordering, the ‘data gap’, said the BVRLA, was hindering the leasing sector’s ability to provide accurate quotes on many different vehicles and their various configurations and options.
 
Meanwhile, in a subsequent white paper, ‘Managing the road ahead: Company car tax’, Venson called on all motor manufacturers to publish business-critical new CO2 figures to enable fleet decision-makers and company car drivers to calculate benefit-kind-tax on vehicles scheduled for delivery from April 6, 2020.
 
At the time, research by the company found that WLTP CO2 figures were invariably not available on the websites and online ‘car builder’ tools offered by many motor manufacturers. Furthermore, industry data providers, which supply contract hire and leasing companies and major fleets with tax, service, maintenance and repair and residual value information, were also unable to source the required figures en masse.
 
Indeed, in response to enquiries, some motor manufacturers said WLTP CO2 data would not be published until closer to the April 6, 2020 date. Others said they understood the requirement for WLTP CO2 emission data and were looking to make the information available as soon as possible, while some manufacturers said the data was accessible on their websites, but admitted greater accessibility was required.
 
In what has proved to be a prescient comment Simon Staton, Director of Client Management at Venson Automotive Solutions, said at the time: “We know that motor manufacturers have the WLTP CO2 data because the NEDC-correlated or converted figure currently available for each car is derived from it. Therefore, it seems illogical that the information is not readily available so fleet decision-makers can review future company car choice lists - particularly where a CO2 emission cap is in place - and drivers can make decisions on their next company car.”
 
Ironically, simultaneously with the BVRLA’s call for fleet decision-makers to review company car choice lists, BMW UK - one of the brands highlighted for WLTP data failings by Venson Automotive Solutions - issued a statement saying that it was “ready” for the change to WLTP CO2 data. Additionally, the manufacturer, said that any model, including Mini, could be ordered “with the reassurance of knowing how it (WLTP) will impact their tax liability for the next tax year, plus subsequent 2021/2022 and 2022/23 tax years.”
 
The manufacturer said that all customers could see the data by configuring their vehicle of choice on - https://www.bmw.co.uk/en/index.html.
 
BVRLA chief executive Gerry Keaney said: “The introduction of WLTP-based motoring taxes is adding yet another layer of complexity and confusion to a fleet sector that is already having to cope with a deluge of new automotive technology and local authority air quality measures.
 
“The BVRLA and its members are working with motor manufacturers and third-party data providers to bridge this gap, but in the meantime, we would recommend customers consult with their lease providers to assess the impact on their fleet policies and procurement.”
 
Ironically, Venson Automotive Solutions advised its clients in the ‘What does WLTP mean for your fleet’ white paper to “undertake a root and branch review of company car choice lists” and to “keep firmly abreast of manufacturers’ data and new model introduction timetables”.
 
But Rob East, general manager of corporate sales at BMW UK, has now countered that by saying: “Ensuring the easy availability of these details underlines our drive to make it as straightforward as possible for business customers.
 
“With the benefit-in-kind tax liability a key consideration for many company car drivers when choosing a new vehicle, it’s imperative that we provide our customers with this information. This transparency allows them quickly to make an informed decision as to whether their favoured BMW works for them from a tax point of view. Without WLTP details, they simply have no way of knowing.”
 
The BVRLA has contacted the Society of Motor Manufacturers and Traders, the motor manufacturers’ own trade body, to offer its support in addressing the WLTP data shortage. It is also working with HM Revenue and Customs on its forthcoming WLTP communications plan.
 
To try and account for the impact of higher CO2 values under WLTP testing HM Treasury decreased company car benefit-in-kind tax rates by 2% for 2020/21, and will then increase them by 1% in 2021/22 and 2022/23. However, there has been no adjustment to first-year Vehicle Excise Duty bands or other CO2-linked motoring taxes.
 
WLTP CO2 data published by BMW UK reveals that company car benefit-in-kind on key corporate petrol and diesel models could be two to eight percentage points higher than the NEDC-correlated value for the same model, while plug-in hybrid electric and 100% electric models delivered major tax savings.
 
Government clarifies post-WLTP test van modification rules 
 
Confusion around carbon dioxide (CO2) emission figures relating to modified vans following introduction of the Worldwide harmonised Light vehicles Test Procedure (WLTP) protocol has led to Government clarification.
 
As a result, new guidance for three different modification routes has been issued by the British Vehicle Rental and Leasing Association (BVRLA), whose inquiries prompted the Government’s clarification. Venson Automotive Solutions is a member of the organisation.
 
The three different routes are:
  • Post-registration modifications: If the work is undertaken after a vehicle has been registered, there is no implication for WLTP or type approval and the CO2 emission figure will remain as for the unmodified vehicle.
  • N1 Enhancement Scheme modifications: The N1 Enhancements Scheme can be used for ‘relatively minor modifications’ to N1 vehicles (up to 3.5 tonnes) and N2 panel vans (3.5-12 tonnes) which have European Community Whole Vehicle Type Approval for a complete vehicle. ‘Relatively minor modifications’ are defined as features including tow bars, additional security locks and other items that do not impact emissions. It is claimed that the process is justified by the limited scope of the kind of changes that can be made and that the firms concerned will have obtained Conformity of Production clearance from the Vehicle Certification Agency to undertake the work. The scheme, said the Government, would remain in the current format until December 31, 2020 unless as part of a review, appropriate changes were identified. 
  • Multi-stage builds: Incomplete vehicles will be supplied with a calculation tool provided by the manufacturer of the base vehicle enabling a converter/bodybuilder to input parameters such as mass, frontal area and rolling resistance in order to calculate a CO2 value. What then happens to the value is dependent upon which approval route is being used for the completed vehicle, but the final CO2 figure will be on the Certificate of Conformity or Individual Vehicle Approval certificate.
A BVRLA spokesman said: “Fleets still have a lot of unanswered questions around the impact that the new WLTP emissions standard will have on taxable CO2 figures and vehicle certification. We are working with members, data providers, vehicle manufacturers, HM Treasury and the Driver and Vehicle Licensing Agency to provide clarity on a number of issues.”
 
The WLTP emissions and fuel economy testing protocol, which replaced the New European Driving Cycle test regime, was introduced in phases:
  • All new car and lighter van models (Class I up to 1305kgs) requiring type approval have been tested under WLTP rules since September 2017
  • All cars and lighter vans (Class I up to 1305kgs) have been tested under WLTP rules since September 2018
  • New types of heavier vans (N1 Class II 1305-1760kgs and III above 1760kgs) have been tested under WLTP rules since September 2018 
  • All heavier vans (N1 Class II 1305-1760kgs and III above 1760kgs) have been tested under WLTP since September last year.
Venson Automotive Solutions has more than 20 years’ experience of fitting out and converting vans through its Equip for Service centre.
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