But the switch from NEDC to WLTP looks unlikely to have a major impact on BIK tax – at least in the short term.
Fleets will be kept in the dark over the results of new official emissions tests until manufacturers are obliged to publish them.
But they are also unlikely to see any sharp increases in tax in the near future. The next full review of benefit-in-kind (BIK) tax bands after the introduction of the new testing regime looks unlikely to deliver serious penalties.
Newly type approved cars from September 2017 have fuel consumption figures set according to the new Worldwide harmonised Light vehicle Testing Procedure (WLTP), which is gradually replacing the previous New European Drive Cycle (NEDC) formulated in the 1980s.
The move follows increasing criticism of NEDC that it was out of date and manufacturers had become savvy at achieving fuel consumption in the laboratory test that was difficult to replicate in real-world driving conditions.
The NEDC test was taken on a rolling road and ran for 11km, spending 13 minutes driving the ‘urban cycle’, then a further six minutes and 40 seconds driving the ‘extra-urban’ cycle, mimicking out-of-town driving, with a maximum speed of 75mph.
Fuel consumption and emissions (CO2, NOx and other particulates) were calculated for both cycles and combined for an average official figure.
The combined cycle CO2 emissions became the basis for Vehicle Excise Duty (VED) and BIK tax in the UK, as well as for Europe-wide targets for average CO2 emissions for car manufacturers.
Car manufacturers were set an average fleet CO2 figure of 130g/km by 2015, with a more stringent 95g/km to be reached by 2020.
The new WLTP test lasts 30 minutes, and includes gradients as well as a higher maximum speed of 81mph. It is expected to produce more realistic (higher) figures for all emissions – CO2, NOx and other particulates – with the CO2 figure published on the Certificate of Conformity alongside the NEDC figure.
No date has been set for it to be published on the V5, though.
WLTP is supported by a second procedure that will measure NOx and particulate emissions, called Real Driving Emissions (RDE).
RDE is a 90-minute on-road test, with apparatus attached to the car measuring exhaust gases.
It’s a more strenuous vehicle test than WLTP but in the short-term includes a conformity factor of 2.1.
If NOx emission levels exceed 2.1 times those achieved in the WLTP (for example 168mg/km instead of 80mg/km – the current Euro 6 diesel limit), it counts as a fail and the vehicle must be retested before approval.
The conformity factor tightens to 1.8x by 2019 and 1.5x in 2020 (120mg/km instead of 80mg/km) for new cars (and all cars in 2021). It will be reduced to 1x as soon as possible, but by 2023 at the latest.
RDE will also take account of some optional features fitted to cars and the impact they have on emissions.
In the meantime, any vehicles homologated to WLTP will use a correlated RDE figure using an algorithm.
Alessandro Paolucci, head of service innovation, Europe, at Jato Dynamics, believes that although CO2 figures under WLTP will be published for all cars from September 2018, there are practical reasons why taxes will not be based on them immediately.
He told Fleet News: “There could be vehicles in stock across Europe for some time after this date, maybe up to a year, that were only tested under NEDC.
“There simply isn’t the capacity to retest everything.”
Paolucci adds that the EU-wide CO2 targets for car manufacturers will be in force potentially until 2021, so NEDC figures will still be needed for a few years.
And, he says, the EU never intended the shift from NEDC to WLTP to be revenue neutral for governments. It simply wanted clarity and transparency for consumers.
However, national governments shouldn’t use it as an opportunity to increase income, although with higher CO2 emissions almost guaranteed under WLTP, it would mean significant tax hikes if the existing BIK tax band structure was transposed to the new CO2 ratings.
It is likely that we will see CO2 emissions increase in stages over the next 12 months, as the first WLTP tests are permitted to use the NEDC correlated value system for measuring.
Paolucci says Volvo is one of the car manufacturers that has WLTP figures because it wanted to rehomologated some cars to better understand the new procedures before new figures for all cars are mandatory.
Diesel versions of the XC60 and XC90, which were recently type approved for Euro 6C, have undergone WLTP tests and have been given NEDC-correlated values for CO2 emissions.
Paolucci says they increased by between 4g/km and 11g/km compared with the outgoing NEDC system, which ranges from potentially no change in BIK tax to as much as three tax bands higher.
If this is reflected across other marques, company car drivers might only see increased taxes equivalent to today’s 3% supplement on BIK for diesel cars.
But some manufacturers will be wary of how the correlated NEDC value will affect the tax position if vehicles perform less favourably, and will already be working on how to minimise the difference.
The fleet sector has made representations to ensure the Government mitigates the transition between the two systems so there would not be a sudden shock from an overnight tax increase when new measurements take effect, and lobbyists seem optimistic on the chances of a phased-in approach.
Gerry Keaney (pictured), chief executive of the British Vehicle Rental and Leasing Association (BVRLA), says: “The Government has not yet committed to a particular start date for when it will begin using WLTP-based CO2 figures for tax purposes.
“It is canvassing views from across the industry and the BVRLA has been involved in a number of productive discussions with the Government and other representative bodies within the automotive sector.
“We feel that a transition date of April 2021 is required in order to give leasing companies, OEMs, data providers and IT companies time to update their systems.
“We have also asked the Government to take a tax neutral approach to WLTP by ensuring the new testing regime does not result in company car BIK tax hikes for hundreds of thousands of drivers.”
However, if car owners believe WLTP will deliver an accurate reflection of fuel consumption their vehicles will achieve on the road, they might be disappointed.
Although it should show higher fuel consumption than the NEDC tests, vehicle manufacturers have been negotiating the parameters of the test for years before WLTP was introduced, and had succeeded in watering it down.
They have had similar success with the staggered approach to thresholds for pollutants measured in RDE.
Some have already criticised WLTP for slower acceleration than most drivers realistically use, with 0-30mph reportedly taking place in 15 seconds, while, like NEDC, manufacturers are permitted to carry out the tests themselves as long as they comply with the rules.
In many cases, drivers should not expect to replicate on the road the figures they see in the new car brochures or on manufacturer websites.
But the RDE element should deliver a reduction in real world NOx emissions from new cars.
It will most likely result in some smaller diesel cars being discontinued, as the technology needed to clean up emissions enough for RDE will prove too costly.
It should lead to improved air quality in the future, assuming governments and other authorities are serious about tackling the problems caused by older vehicles that comply with weaker emissions legislation
If RDE is to deliver what’s needed, it requires a joined-up approach that does not ignore the sources of current levels of pollution from vehicles.
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