Fleet Leasing

Fleets running vehicles for longer due to WLTP tax confusion, says Arval

Uncertainty surrounding the impact of the new WLTP fuel consumption and emissions test on company car taxation is resulting in some large fleets extending leasing contracts.

Arval says that, with information on taxation only available up until 2020-21, many drivers and their companies acquiring cars now do not know how much tax they will have to pay over the life of the vehicle.

“Fleets find themselves caught in limbo,” said Shaun Sadlier, Arval’s head of consultancy. “The Government has yet to indicate when it will make a decision on how WLTP is incorporated into company car taxation, and the actual figures are some way off.

“For many years, benefit in kind tax tables have been made available for 3-4 years in advance, so that businesses and their drivers have a good indication of their tax liability and can plan accordingly. But at the moment, we simply don’t know what is happening.”

As a result, Arval says it is seeing an increasing trend of fleets, especially larger corporates that are generally better informed about WLTP, extending lease contracts on a month-by-month basis, effectively sidestepping the situation.
 
PREDICTED PEAK IN CAR SALES

A clearer picture will inevitably create a sudden burst of demand for new car leases, according to Sadlier.

“We have seen new fleet car registrations start to tail off and, while it is probable that some of that is due to general economic slowdown and market uncertainty, some of it will also be due to deferred vehicle replacement,” he said.
 
“It seems very likely that we are building up a logjam of demand and that, following a Government announcement on WLTP and taxation, we will see a peak in car sales as everyone rushes in to place orders.
 
“This, in itself, may create knock-on problems because we don’t yet know what types of cars and specific models WLTP will make attractive from a tax point of view, and they may very well be in short supply in the medium term.”
 

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Comments

  • Sage & Onion - 13/06/2018 17:51

    New car Sales/Registrations are probably also down because there is reduced production from manufacturers pulling models until they can revise them with more favourable WLTP results and reduced stock choice because dealers haven't ordered any pipeline stock that they may end up not being able to sell after 31st August. Some pipeline stock that could be secured also can't be relied upon because these too are being withdrawn with little or no notice. So I don't think it is so much of a lack of demand or sidestepping the long term problem or a slowdown in the economy but more of a case of we can't get cars that fit our policies so we shelve replacements until we can.

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