WLTP-based emissions data is now available for the majority of cars on sale, but industry experts warn the challenges for fleets are far from over.
Since September 1, all new cars have had to conform to the new Worldwide harmonised Light vehicle Test Procedure (WLTP) which was developed to provide real-world emissions and fuel economy figures.
CO2 emissions for cars tested to WLTP are currently given an NEDC-correlated value, which is lower than the true WLTP figure.
According to a report from Jato, the NEDC-correlated CO2 values are around 10% higher than the existing NEDC figures when compared like-for-like, meaning drivers choosing a new car now will face increased benefit-in-kind (BIK) tax.
The majority of manufacturers only began publishing the NEDC-correlated data for existing models recently, meaning fleets were left unable to order vehicles and drivers were unable to calculate future taxation.
But, this interim data is only half of the story. In 2020 fleets face a new challenge as true WLTP emissions figures will begin to be enforced for new models, raising published CO2 emissions further.
The EU has stated that individual governments should ensure that end-users do not face additional taxation as a result of the new testing regime, but the UK Government will not announce its tax position until November’s Budget.
In its Fleet Budget Manifesto, Fleet News is calling on the Government to re-align BIK tax to take into consideration WLTP-based CO2 and ensure drivers aren’t penalised for choosing vehicles comparable to their previous one.
Ashley Barnett, head of consultancy at Lex Autolease, said: “Fleets still need to know how the WLTP data will be applied. Until they have visibility of company car tax bands beyond 2021 – and more importantly, how the WLTP value will be used in determining taxation on cars – it will be difficult for fleet managers to make policy decisions and for employees to make truly informed choices.
“The availability of WLTP-based data is a positive step but buying decisions will continue to be delayed and contracts extended until there is long-term clarity around BIK.
He warned that employees may be pushed towards a largely unregulated grey fleet environment as a result.
Keith Cook, senior manager – group finance operations at Computacenter, added: “We’ve held off launching our new car scheme until September to align it with WLTP, but it still feels quite uncomfortable and I can see why PCP or PCH is attractive.”
Zenith, which removed all non-WLTP tested models from it quoting platform, told Fleet News that there has been an increase in the number of quotable cars but it is still a long way below where it used to be.
Nick Hardy, sales and marketing director at Ogilvie Fleet, added: “We are finding that the majority of our clients - certainly the larger fleets anyway - are wanting to hold back on orders until there is clarity on taxation and re-evaluate policies once the unknown is known. I think we are in for a few tough months ahead yet.”
Some fleets are considering ditching the company car altogether. Nigel Boyle, administration and technical director at PD Hook, said: “If you look at the tax a driver has to pay now, they might as well get a car on PCH. We’ve done the calculations and a lot of our drivers could be better off without a company car. At the moment we are seriously considering offering cash instead. If others do the same then the Government could lose a lot of revenue.”
The luxury car and SUV segment are the worst affected, with published CO2 emissions rising, on average, by between 16% and 18%.
Key fleet cars have been affected by the changes too. BMW has discontinued its plug-in hybrid 330e and the 520d Efficient Dynamics, both popular models with drivers. The company said it stopped selling the 330e primarily because it wasn’t updating the existing 330e engine to meet the new emission standards, with a new 3 Series due in 2019. Also, it no longer saw the need for the 520 ED in the line-up.
Mercedes-Benz has also stopped production of its plug-in hybrid C-Class and E-Class models but it said that WLTP had coincided with some lifecycle changes and product launches and that the stoppages had not been prompted by WLTP.
The Toyota Prius has seen an increase from 70g/km to 78g/km, pushing it out of the 75g/km bracket for congestion charge exemption. Also, the car jumps from 13% BIK to 17% and will find itself in the 19% band next year. The company said “we don’t see it having a massive impact”.
In the compact executive category Jaguar’s XE 2.0d 180 jumps from 111g/km to 137g/km, meaning a driver taking one now will pay more than £300 per year extra in tax (20% taxpayer) compared to if they ordered it six months ago.
David Fisher, fleet manager at Rexel, said: “The effect of the tested vehicles on the Rexel fleet line up is that the majority of vehicles have moved by two or three grades so employees looking to renew now would not be able to have the same vehicle as an employee who renewed six months ago and, if the business chooses to keep the vehicle in the same grades, this will greatly increase costs to the business and the driver.
“This is exacerbated by the change in corporation tax law where all the exemption cap for CO2 output has moved from below 130g/km to below 110g/km. This goal is almost impossible to hit and will cost business’ with larger fleet hundreds of thousands of pounds a year.”
Other manufacturers have fared better. Revised powertrains in the facelifted Mercedes C-Class have resulted in minimal changes. The C200d has increased CO2 output by 2g/km to 108g/km when compared to the old model and the BMW 320d M Sport jumps by 10g/km to 126g/km.
Honda has managed to reduce the emissions from its 1.6-litre diesel engine in the new Civic to 93g/km. Ford has managed a similar victory with its latest 1.5 TDCI unit emitting 94g/km Focus, an improvement of 5g/km.
Drivers looking for SUVs are the hardest hit. Popular models like the Mercedes GLC, Jaguar F-Pace and Land Rover Discovery Sport have all been pushed above 130g/km, a common CO2 cap in many choice lists.
Elsewhere, previously low-emission diesel models are being dropped from pricelists altogether. The facelifted Fiat 500X will only be available with petrol engines, as will the Honda CR-V.
Optional extras are also getting deleted from pricelists, as WLTP requires every possible configuration of a car to be tested individually. Seat has moved to a trim-only model and Mercedes-Benz has reduced the additions on most of its models, in favour of option packs.