The transition to stricter fuel economy and emissions standards is unravelling a baffling array of overlapping regulations. Alex Grant outlines the key facts fleets need to be aware of, and the challenges they could pose.

WLTP testing involves higher loads and higher speeds than NEDC

The basics

Manufacturers are facing unprecedented regulatory pressure to cut CO2 and pollutant levels for new and forthcoming models, the staged implementation of which is confusing at best. There are three topics that fleets need to be aware of.

Worldwide harmonised Light Vehicles Test Procedure (WLTP)

Headlines about the widening gap between brochure and ‘real-world’ fuel economy figures are nothing new. In 2017, the International Council on Clean Transportation reported a 42% average difference, based on a study of 1.1m European vehicles – up from 25% in 2011, and 10% in 2001. An issue attributed to the New European Drive Cycle (NEDC) used to measure fuel economy and CO2 emissions for new cars.

The NEDC was replaced on 1 September 2017. WLTP is a longer, higher-load test cycle, designed to be more realistic than its predecessor, and carmakers had 12 months to re-test their model ranges under the new regime. Because this also reflects the impact of options, that process has involved putting every combination of trim, equipment, bodystyle and engine through testing. The EU said it expected a 10-20% rise in official fuel consumption and CO2 emissions as a result.

Real Driving Emissions (RDE)

Few fleets would have been aware of the RDE test before last year’s Budget made it a core component of diesel taxation. This is an on-road test, using portable equipment to measure and compare harmful emissions to the laboratory-derived results, and there is a tightening ‘conformity factor’ requiring those two figures to gradually align.

RDE1 allows vehicles to emit 2.1 times more pollutants on the road, and becomes mandatory for all new cars from 1 September 2019. From 1 January 2020, newly-homologated cars move to RDE2, with a limit of 1.5 times more pollutants on the road, and this applies to all new cars one year later. RDE2 compliant diesels will be exempt from the 4% Benefit-in-Kind surcharge.

Euro 6c, 6d Temp, and 6d

Fleets will already be familiar with the ‘Euro’ emissions standards, introduced in 1992. But Euro 6 – notable for almost closing the gap between diesel and petrol NOx emissions – isn’t a one-stage process, and it is also linked to the roll-out of WLTP and RDE. Light commercial vehicle deadlines are 12 months later than those for passenger cars, outlined below:

Confusion & correlation: the story so far

The phase-in process has been underway for more than a year, and the fallout reflects how confusing this has become for manufacturers, dealers and end-users.

The EU has tasked manufacturers with ongoing improvements in average CO2 emissions for new cars – 2021’s target is 95g/km, with financial penalties for those who don’t conform. But previous limits have been set using the NEDC and, as WLTP is much tougher, manufacturers are still producing NEDC data for comparative purposes. This data is generated using software called CO2MPAS, which converts WLTP figures to an ‘NEDC Correlated’ (or ‘NEDC Equivalent’) value.

So WLTP-tested vehicles will, for now, have two sets of fuel economy and CO2 data – WLTP and NEDC Correlated. To limit disruption, the DVLA has confirmed that the latter will continue to appear on vehicles’ V5 documents, and HM Treasury will use NEDC figures as a basis for vehicle excise duty and company car tax until April 2020. In theory, that means business and private motorists don’t have to pay much attention to WLTP yet.

Unfortunately, this data doesn’t seem ‘correlated’ at all. Manufacturers have been busy re-testing their model ranges this year, releasing fuel economy and CO2 figures which are at times significantly higher than mechanically identical cars sold last year. Given that vehicle tax is based on CO2 emissions in the UK, and that there has been no allowance for the gap between the two sets of data, it’s led to rising costs just as HM Treasury introduced penalties for diesel vehicles.

These gaps are significant. Jato Dynamics data reflects a 9.6g/km average rise in CO2 emissions, with mid-size SUVs up 16.7g/km. And the full WLTP figures – which are likely to be higher still – have not been made public for most vehicles yet.

Rupert Russell, director of Carmen Data, says this reflects the very binary conversion process: “WLTP testing is more comprehensive than NEDC and has fewer loopholes. The CO2MPAS tool will only adjust for official differences and not the flexibilities that manufacturers learned to exploit over decades of NEDC testing.”

Spotting the trends

A tax system allowing for NEDC Correlated figures isn’t easy to put in place, because the results vary. Earlier this year, Cap HPI studied more than 600 vehicles, finding that this half-way-house data was disproportionately affecting fleet-weighted drivetrains. There was an average 12.6% rise for diesels, and 27.3% increase for plug-in hybrids, while petrol vehicles were up 7.3% and hybrids up 7.8%.

There are few trends even within those sub-sets, as product manager, Beth Davies explains: “WLTP is having a varied impact across all sectors, and it’s clear that no one sector is more affected than any other. The data shows the impact varies by model and even derivatives in a model range. Equally, no drivetrain is predominately impacted over another.”

Fleets can’t necessarily view NEDC Correlated data as a sign of its WLTP performance, either. Russell warns that this depends on how effectively CO2MPAS has converted the figures back, adding that it would be hard to judge which have got off most lightly from the conversion.

“There is wide variability, and few examples of published WLTP figures,” he says. “However, using the Mazda6 as an example, it seems that if the CO2MPAS tool works well, a large jump [from NEDC to] NEDC Correlated means there will be a small jump from NEDC Correlated to WLTP. And vice versa if the tool works properly.”

Some manufacturers have also used WLTP re-testing as an opportunity to perform mechanical upgrades to meet Euro 6d Temp requirements – including conforming to RDE1 limits. Selective Catalytic Reduction (AdBlue) is becoming widespread to improve on-road performance, and many of the latest petrol engines feature particulate filters. Both can affect fuel economy and CO2 emissions.

Simon Staton, director of client management at Venson, says this has a knock-on effect for businesses: “It is highly likely that fleet operators will have to reconsider their CO2 thresholds, monthly allowances and vehicle choice lists. Coupled with this, there is the financial implications for both the employer and the employee.”

Testing times

Shifting legislation has led to upheaval of new car sales across Europe. Many early WLTP-tested cars had a CO2 disadvantage from moving to NEDC Correlated data, while broader model ranges (or slower-responding manufacturers) have come up against the 31 August deadline for re-testing. Only a limited volume of pre-WLTP cars (2,000 units, or up to 10% of 2017’s volume) can legally be sold after this date, and only if they were built before 1 June. EVs are exempt.

Carmakers have planned for this, prioritising the most popular cars and in some cases temporarily removing slower-selling variants from the range, while Zenith removed pre-WLTP cars from its order books to avoid disruption. The rush to register time-sensitive stock is evident in SMMT figures: up 23.1% year on year in August, before dropping 20.5% in September.

Deal or no deal – where do we go from here?

Brexit might seem like a pathway out of complicated EU-led emissions legislation, but it’s worth keeping an eye on plans from Brussels. Even in a ‘no deal’ scenario, the EU’s framework will be adopted in the UK until a new system is put in place. The Government’s aim is to be “at least as ambitious” as targets set by its closest neighbour, and the short-term picture suggests the two markets will be aligned for some time yet.

The DfT has ruled that manufacturers must introduce full WLTP fuel economy figures in promotional material from January 2019, in line with the EU’s recommended timeframe. There will still be a ‘combined’ (or weighted combined, accommodating electricity use for PHEVs) cycle figure, but the familiar ‘urban’ or ‘extra-urban’ data is replaced by four figures derived from different speeds; ‘low’, ‘medium’, ‘high’ and ‘extra-high’.

WLTP CO2 figures will be published around a year later, ahead of tax reforms from April 2020. In the meantime, cars will have NEDC Correlated CO2 figures and unrelated WLTP fuel economy. This could mean two cars with identical fuel economy have different CO2 figures and tax bands, or vice versa. Although it’s confusing, this does mean fleets get earlier access to the more realistic fuel economy information, and can make more accurate total cost of ownership calculations.

Russell believes much of the confusion could have been avoided: “The government should have moved straight to WLTP and reduced the tax thresholds for WLTP-tested vehicles. The CO2MPAS tool was designed for fleet averaging, not individual cars.”

In the meantime, the EU has voted in favour of 20% reduction on 2021’s 95g/km CO2 average by 2025, and 40% by 2030, with sub-50g/km cars to be 20% and 35% of sales respectively by those deadlines. On-road CO2 testing is also on the cards, and RDE3 will further tighten the conformity factor for new models. This at least sets at a benchmark for the UK, while also steering R&D of new models sold in the region. However, as compliance for combustion engines becomes more difficult, fleets would be well advised to get used to the battery-powered alternatives.