WLTP: How will it affect your business?

There’s so much to consider when selecting a new company car – the top of the list for many motorists being fuel economy, so it can be frustrating to find there’s a disparity between the actual figures and those claimed by the manufacturer. In an attempt to counter this, as of August, a new car tax emissions test called the WLTP is being introduced to measure fuel consumption and C02 emissions.

At the moment, all new cars are subject to a test called the NEDC (New European Driving Cycle), which was introduced in the 1980s but hasn’t been updated since. The outdated test allowed manufacturers to paint the best picture of their vehicle, in terms of emissions and miles per gallon, by conducting the tests in unrealistic lab conditions and letting them strip the vehicles of extras, such as seats and hubcaps, to improve the ratings. The WLTP is being touted as a far more realistic way of testing, simulating real-world conditions and testing at a greater range of speeds, gear changes and temperatures, as well as acknowledging additional equipment that might make the vehicle heavier.

However, it’s a potential headache for businesses seeking new company cars. Any car registered after 19 August will have to pass the new WLTP testing. What’s more, many car manufacturers have been failing the new tests, which has created a shortage in those particular types of car. The lack of stock availability has had a knock-on effect for brokers. And the impact doesn’t stop there. Starting in 2020, new tax bands will be introduced to reflect the new regulations, meaning that SMEs that are looking for a new company car might feel the pinch, as a number of new car models may have increased by as many as three tax bands. As such, it’s important to make the right decision now.

In recent years, SUVs have become an increasingly popular choice as a company car, a trend which is expected to come to an end, as they are performing poorly under the WLTP testing and are therefore set for a major cost increase. Similarly, hybrid cars are among the worst performers and most are failing, which is at odds with the Government’s pledge to cease production of petrol and diesel cars. Hybrid cars tend to be expensive as a rental car and, due to the downtime between charges, aren’t the best option for businesses with a lot of mileage. If you’re looking for a company car that does more, diesel is still your best bet. If you’re still unsure of what the new regulations will mean for you, just give one of our friendly advisors a call.

Ultimately, WLTP is going to shake up the company car market – in the short term. But, with strong guidance, you can navigate the changes and come out on the other side.