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The Insider: There will be trouble ahead…

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“There may be trouble ahead” is the first line of Irving Berlin’s “Let’s Face the Music and Dance” – written, ironically, for the film “Follow the Fleet”. And trouble ahead is exactly where our industry is heading, explains The Insider.

Higher CO2 emissions and worse MPG

The snappily titled, Worldwide harmonised Light Vehicle Test Procedure (WLTP), replaced the old New European Drive Cycle (NEDC) in September 2017 and manufacturers have until 1 September 2018 to re-test their models and publish the revised CO2 emission and fuel economy figures. Even more confusingly, until April 2020, WLTP data will use a conversion tool to produce ‘NEDC Correlated’ figures. As Fleet World readers will know, the WLTP test results in higher ‘official’ CO2 emissions and worse MPG.

 

Derogation confusion

Derogation literally means “an exemption from or a relaxation in the rule of law”. The law in the UK means that only WLTP-homologated cars can be registered after 1 September 2018. The UK has yet to decide exactly what derogation parameters will be allowed so manufacturers are unsure exactly how many old NEDC homologated cars they can register after

1 September 2018. In turn, this is causing a lot of headaches at manufacturers in terms of how many of these old NEDC homologated cars to get registered by 31 August 2018 and how many can be covered by derogation into September.

And another thing – it is only cars built before 31 May that are eligible for any derogation. All cars built between June and August 2018 must be registered by 31 August 2018. And with a big registration market in September, that is going to cause some massive logistical challenges.

 

What are the manufacturers doing?

The WLTP challenge for manufacturers is much bigger than going from, say, Euro 5 to Euro 6 diesel standards, as it involves petrol engine homologation too. In addition to re-testing literally thousands of different derivatives, they are then trying to engineer optimal solutions to minimise the CO2 increase. A tough task.

 

What are the implications for our industry?

Fundamentally, WLTP will cause headaches for manufacturers, dealers, leasing companies, data providers and employers with company cars over the next few months. This is exacerbated by the continuing pressure from exchange rates on manufacturers to extract a reasonable profit from the UK. If you’re the big cheese at a manufacturer deciding where to send your precious allocation of build for non-WLTP compliant cars, are you really going to allocate to the UK with its lower profit margins?

Some manufacturers have got a clear view and are well prepared for WLTP. However, some don’t yet know when their new, WLTP-homologated cars are going to be orderable, let alone when they’ll be delivered to customers.

Some specific WLTP challenges coming are:

  • Some engines will be unavailable
  • There will be supply gaps between old and

 

New engines

  • Many new engines will require expensive re-engineering, perhaps derived from an entirely new engine, or a new gearbox, a new stop/start system or a gasoline particulate filter for some petrol engines
  • And almost guaranteed, prices will increase

These challenges will cause us all headaches. It is easy to imagine a company car driver looking at the company car choice list in May, expecting delivery in September on the new ‘68’ plate. But will that be the case? It might be they can take an old, non-WLTP car that is in stock that has lower published CO2 emissions and probably therefore, lower BiK tax and have it registered in September. Or it could be a new, WLTP-homologated car, that has a gap in production and won’t be delivered until November.  Or will they get a car built in June that must be registered by 31 August?

 

How to avoid ‘trouble ahead’

Well, if you can, bring forward your known orders of cars so that there are less variables to contend with. If you can’t, then be prepared for a bumpy ride through WLTP this spring and summer and know that your phone will ring. You could even change your ringtone to the famous Irving Berlin song to get you in the mood.

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