June 28, 2018

Struggling With The Impacts Of WLTP? Mini-lease Provides A Solution

Struggling With The Impacts Of WLTP? Mini-lease Provides A Solution

To say that WLTP (the World Harmonised Light Vehicle Test Procedure) is causing the fleet industry a headache is something of an understatement. The new emissions testing standard, which come into force for all cars from September this year, is having a significant impact on vehicle manufacturers, fleet managers and drivers.

Manufacturing Issues

For manufacturers, the main issue is ensuring that every single model has been tested under the new standard in time for the September deadline. This not only means undertaking the new, more stringent, WLTP lab tests but also road testing every vehicle in their range, with every drivetrain combination, under the RDE (Real Driving Emissions) test element of the European regulations.

This has led many manufacturers to stop taking orders for certain vehicles and to pull some from production altogether, if it is not deemed worthwhile getting them through the tests. To make matters worse, to meet the very latest version of the Euro 6 emission standard (Euro 6 d-Temp), many petrol models are having to be re-engineered to include particulate filters for the first time.

From a fleet perspective this is manifesting itself as rejected orders, altered specifications and much longer lead-times.

Taxation Issues

Fleet managers and drivers are also having to deal with the uncertainty around exactly what WLTP will mean from a VED and benefit in kind tax perspective. We do know that the old, NEDC CO2 figures will continue to be used for tax calculations for some time, and that the CO2MPAS model will be used to give vehicles tested under WLTP comparable CO2 values to those that would have been measured under NEDC.

What is less clear is when the switch to WLTP tax calculations will be made and what retrospective changes this will mean. Here are a couple of examples:

  • If you choose a company car before September 2018 that was originally tested under NEDC, will your BiK position change when the car is retested under WLTP rules? Of course, the CO2MPAS conversion will be applied but this has already been demonstrated to deliver significantly higher CO2 ratings.
  • If you choose a company car after September 2018 it will have been tested under WLTP and you’ll be taxed using the CO2MPAS converted figure – but for how long? The Government has hinted that 2020 will be the year when the full transition to WLTP for tax purposes will take place but this has yet to be confirmed.

Clearly, businesses will have similar concerns regarding VED and National Insurance increases under WLTP.

How are fleets reacting?

While a few organisations have taken the view that bringing forward replacement vehicle orders (and bearing the long lead times) is the best way forward, more have chosen to delay ordering until the rules have been clarified and manufacturers are in a better position to deliver the vehicles that they want.

Both of these strategies can mean that drivers are without a suitable vehicle for an extended period of time.

Mini-lease steps in

Long-term rental products, like CLM’s Mini-lease, have proven to be a popular choice for businesses faced with issues of delayed orders and extended lead times.

With the flexibility of from one to 12 months durations, Mini-lease provides the ideal solution to plug gaps in fleet capacity at a far lower cost than can be achieved through short-term rental.

The product also offers the choice of an exact model rather than a class of vehicles and allows the driver to keep that vehicle for the entire length of the agreement, rather than having to swap it at the request of the rental company. This also gives the advantage of a single P11D value being valid throughout the contract.

Vehicles can be booked, extended and cancelled online through the bespoke system, which also delivers a comprehensive range of management reporting and invoicing. And, of course, all vehicles are provided with inclusive maintenance, servicing and tyres giving complete peace of mind.

To find out more about CLM’s Mini-lease offering, you can read more here.