The new WLTP figures for vehicle emissions and economy come, officially, into force on Saturday, September 1st. So what? What is WLTP and what does it mean for you, the car buyer and consumer? Well, immediately, not much but in time, probably quite a lot…
WLTP stands for World harmonised Light duty vehicle Testing Protocol and it’s the replacement for the decades-old NEDC, or New European Driving Cycle test. You know those figures, in the coloured bands, that you see in car dealers? The ones that tell you how much fuel the car uses and what it’s Co2 emissions (and therefore its motor tax rating) are? Those come from the official, laboratory, tests which used to be NEDC and is now WLTP.
The difference between the two is how tough one test is relative to another. The NEDC test had become the equivalent of a Leaving Cert paper that was identical to the practice paper. Car makers knew it too well, knew how to ‘game’ it, and knew where the loopholes were. Consequently, the gap between what the figures said, in terms of fuel consumption, and what a given car could achieve in real-world driving, grew and grew, to the point where there could be as much as a 40 per cent variance between the test and what you could realistically achieve when driving.
The final straw was the diesel scandal, triggered by Volkswagen’s use of cheating software, designed to fool the test entirely. The WLTP test, which takes longer, uses more variable elements, and runs the car harder and faster than ever did the old NEDC test, is the answer, the fix, and the backlash all in one.
Closer to reality
So it’s good, then? We’ll know better, at the time of purchase, what our likely average fuel consumption is likely to be, and can budget accordingly? Yes, that’s true - and from what we’ve seen of the WLTP fuel economy figures, they are much closer to the reality of everyday driving than the old NEDC ones.
The problem is in the Co2 figures. Emissions of carbon dioxide are directly related to how much fuel you burn, so if the test says the fuel consumption is going up, then that means that your Co2 figure is going up. Because of how the Irish vehicle taxation system works, that means that both the price of your car, and the amount of annual tax you pay, are both going to go up, as both Vehicle Registration Tax (VRT) and motor tax are calculated solely on the level of Co2 emissions.
So, how much are prices going up? This is where it all becomes very confusing, and basically no-one knows anything until the Government decides what it’s doing.
There are two levels to the new figures. WLTP, in its fullest form, is a seriously tough test, and the latest reckoning is that, across the industry, it will increase official Co2 emissions by some 21 per cent. That would result in significant price and tax increases, if the current tax system is retained, as cars jump up the tax bands.
We’re not using full WLTP figures yet, though. Currently, car makers are allowed to use what’s called an NEDC Correlated figure, which is a mish-mash of NEDC and WLTP and which, across the industry, causes a roughly six per cent rise in Co2 figures. As of right now, the Government and Revenue are using the NEDC Correlated figures for the tax system, and can continue to do so, theoretically, until 2020, when the full force of WLTP must be brought in.
Profiteering from the changes
According to one Irish motor trade insider: “the Government has been asked by the EU not to profiteer from the changes, so the departments have been seeking guidance from the industry here as to what’s the best thing to do, and which way the figures are going. The general feeling is that there’s not enough information out there yet to justify any changes in the tax system, and definitely the Government is worried about introducing changes this October, to account for the six per cent average NEDC Correlated figure, and then having to change again next year to account for the 21 per cent full WLTP average change.
My feeling is that nothing's going to change in this budget." There had been speculation that the Government, and the Department of Finance, would act in the coming budget to widen the motor tax bands so as to follow the EU's instruction that the change to WLTP should be 'revenue-neutral' but that seems to have died away, a little, in recent weeks.
So prices are going to go up by six per cent? Not exactly. That’s a rough industry average figure, which means that some individual models are going to see their emissions rise significantly, even under the relatively gentle NEDC Correlated figures. For instance, one older petrol-powered model was barely affected by the change, while a much more modern, supposedly more efficient diesel car actually saw its Co2 figures jump by a whopping 30g/km.
Some brands are actually entirely unaffected. Honda, for instance, has not seen any of its models, bar one, increase their prices as a result of the switch to NEDC Correlated figures, and the company says that it will absorb the one per cent price increase of that particular model (a spokesperson for Honda Ireland steadfastly refused to reveal which model that is, but oddly it's not the Civic Type-R, which you may have been expecting).
There will be similar cost-absorbing across other brands, although one industry expert warned The Irish Times that there will be limits to such supposed generosity. "€600 we can live with. €3,000 we can't" he said. Some of the price hikes will be partially hidden, as many car makers are using the introduction of the WLTP regulations to launch revised versions of their cars, with the price rises triggered by WLTP hidden amid new model trims, and changes in equipment levels.
Price rises
There could be further price rises to come, because of the new tests. As Volkswagen has found out, getting vehicles through the new test has been both time consuming and expensive, with some key models actually being removed from sale entirely (the Audi RS3 is a high-profile example) because it wasn't worth the effort. VW has been especially hard-hit by the new regulations, as it has lost so many senior engineers in the wake of the diesel scandal. "Engine development expertise has been lost" said VW's chief executive, Herbert Diess, this week.
There’s another potential cost too, and that is fines from the EU for missing emissions targets. According to JATO Dynamics, a London-based car industry analysis firm, the gap between the old NEDC test Co2 figures and the new WLTP versions is wide, and growing fast. Earlier this year the London-based analyst company said that, on average, re-testing for WLTP would see an average increase, weighted by volume of sales, of around 8g/km of Co2. Now though, JATO says that the increase is already at 9.6g/km and growing fast.
The sample size of tested vehicles has increased in the past few months as car makers have been scrambling to get their vehicles tested under the new regulations. Even so, only 20 per cent, by volume, of the European car market has been re-tested according to JATO, which means that 9.6 g/km figure is likely to grow further.
Breaking the increase down segment-by-segment shows just what a difference vehicle size and weight makes to the increase. City cars, with an average increase of 6.6 g/km of CO2, are well below the average figure, as are small SUVs (7.5 g/km), and family hatchbacks in the C1 category (8.8 g/km). Large SUVs posted an increase of 14 g/km, though, with luxury cars seeing the biggest gain of 18 g/km.
It has taken 11 months for 20 per cent of existing model/versions in the market to be re-homologated and published, meaning the industry could face a backlog of vehicles that cannot be registered if it isn't completed by 31 August
A spokesperson for JATO told The Irish Times: "What our latest data shows is that the impact of re-homologation to WLTP testing could be even higher than previously thought. Following our analysis of a sample of the vehicles currently re-homologated, if this is extrapolated to the whole fleet, CO2 values could reach 130 g/km in 2019, which is a significant 12 g/km increase on the 118 g/km currently seen in Europe and above the target set by the EU. As a result, car manufacturers could face a penalty of €95 per gram over the target per vehicles sold. This could amount to a huge financial penalty for the European car industry who registered more than 16 million vehicles in 2017.
“What is also worrying for the industry is that the publication of re-homologated models/versions is not progressing as quickly as expected. It has taken 11 months for 20 per cent of existing model/versions in the market to be re-homologated and published, meaning the industry could face a backlog of vehicles that cannot be registered if it isn’t completed by 31 August.”
There is one, final, glimmer of hope for the consumer, though. Between now and September 2019, car makers are being given a few exemptions to sell off existing stocks of vehicles that are not being re-tested under WLTP, which could mean there are at least a few bargains to be had.
What are Irish car importers and manufacturers doing for WLTP?
We approached all of the major car importers and makers in the Irish market asking them how much their prices were going up by, and which models (if any) they would be culling. Not all had responded by the time of going to press, but the following replies do at least give a taste of the changes that are coming in the short term.
Audi: RS3 dropped from range.
BMW: Average €450 price rise across the range. 530e plugin hybrid rises by only 2g/km on WLTP. All models now priced for WLTP.M3 and outgoing 330e dropped from range.
Citroen: Average of two per cent rise in emissions under the new figures, and some models are affected, but the introduction of new model year versions, and changes in equipment, mask the true WLTP price rise. Full WLTP implementation would cause a 27 per cent rise in Co2 emissions, on average, across the range. No new prices available at time of going to press.
Lexus: "Being 100 per cent hybrid we are not dropping or stopping sales of any models in the range. There were some individual models and versions that saw prices go up, but only by around €500."
Mazda: "It's very difficult to isolate and attribute a percentage price increase when most of the models in our range are going through significant changes in terms of spec and engine options. Furthermore we have models such as the Mazda 2 where the price has remained the same regardless of WLTP."
Mercedes-Benz: Mercedes Ireland sales manager Ciaran Allen told The Irish Times that: "Mercedes-Benz confirmed that it is still working its way through much of the detail with the result that it could stretch into October before a full price list is finalised and available for publication. Mercedes-Benz went on to state: 'when all of our 2019 model range and specifications are fully decided upon and finalised we will release a complete price list through our dealer network and SIMI channels. In this regard, a moderate increase across most models can be expected. In addition, customers are reminded that all prices across all brands could be affected if Government was to make any future changes to regulations that are unknown to the industry at this stage."
Nissan: "Obviously the good news for Nissan is that the Leaf being a zero emission vehicle will be totally unaffected by NEDC Correlated/WLTP. In anticipation of the introduction of WLTP we will have new revised engines in the X-Trail and Qashqai ranges which will mean neither of these ranges will see any WLTP pricing effect. The rest of our range will have to move up one Co2 band and depending on the outcome of budget 2019 will have a NEDC Correlated/WLTP price related increase but we don't believe that these increases will be significant. Furthermore, presales offers will most likely more than compensate for these increases."
We will have new revised engines in the X-Trail and Qashqai ranges which will mean neither of these ranges will see any WLTP pricing effect
Opel: "Opel has been preparing its portfolio for the introduction of the new WLTP standards for several years and the entire passenger car range - without any restrictions - meets these new requirements. Opel is thus one of the first in the market to be 'WLTP-ready' with its entire passenger car line up and customers can order the whole range, at Opel dealers without having to fear lengthy delays in delivery. New WLTP pricing for all Opel vehicles will be released very shortly."
Volkswagen: The Irish Times spoke to Volkswagen Ireland's Head of Product and Planning, Martin Cardiff. "For WLTP and Model Year 2018 to Model Year 2019, we have some models which get new engines, some equipment enhancements mainly on Highline versions where security & service becomes standard, and some models jump tax bands which means on average we have a 2.5 per cent price step" said Cardiff. "The good news is that until 2019 we have taken a production run of 300 Polo Trendline 1.0-litre TSI 95hp coming in at a reduced price of €400 above the Trendline 1.0-litre 65hp MPI, so we get extra power and the smoother TSI for only €400. We are also selling the Passat Comfortline & Highline 2.0-litre TDI 150hp for the price of the 1.6-litre TDI 120hp on orders until the end of October."
