Opinion: The wonderful(!) world of WLTP
Alain Duez, international senior consultant, fleetcompetence Group, looks at the shift to the WLTP protocol and the impacts on fleets.
To set the overall scope of the Worldwide harmonised Light vehicles Test Procedure (WLTP), let’s summarise the concept and evolution. In the 1980s, the NEDC (New European Driving Cycle) was designed to measure vehicle emissions. Due to the evolution of technology and driving conditions, that cycle became outdated and the WLTP protocol was born.
While the old NEDC test determined values based on a theoretical driving profile, the WLTP cycle was developed using real-world driving data. WLTP therefore – in theory – better represents everyday driving profiles, however it is still measured in a laboratory environment.
WLTP was developed with the aim of being used as a global test cycle across different global regions, so pollutant and CO2 emissions, as well as fuel consumption values, would be comparable worldwide. However, while the WLTP has a common global ‘core’, the European Union and other regions apply the test in different ways depending on their road traffic laws and needs. In Europe specifically, the transition phase including the full application on country legislation is still ongoing.
Comparing the old and new standards, it is as if you were measuring the temperature in Celsius or Fahrenheit. The same ‘heat’ (i.e. CO2 emissions) is measured in two different ways, where WLTP would equal the Fahrenheit standard, resulting in higher effective values. Consequently, fiscal measures such as CO2-related road taxes or Benefit-in-Kind schemes, will hit more in general. Additionally, governments are expected to adapt their level of taxation even more frequently.
From an OEM perspective, the request of the European Commission to have their mix of CO2 emissions for new vehicles being set at 95g/km of CO2 in 2020 has also triggered new strategies to avoid severe penalties.
After an initial ‘wait-and-see’ period, fleet operators finally started to take counter-measures in 2019 resulting in a number of activities.
They revisited the OEM market, leveraging brands offering the best fit with their future car policy strategy, balancing powertrain vision, mobility solution and technology evolution.
Fleet operators also revisited the landlords offering as – according to the brands, models or powertrain selected – residual value will play a major role on the quotation as well as the ‘more realistic’ consumption measured by WLTP. The leasing world is evolving, which means companies need to find the right partner offering flexibility, long-term best market value, mobility solutions and tools.
Company competitiveness was maintained by re-designing the car policy, making sure the HR package, which includes fleet, remains attractive, while on the other hand sustaining the economic part in managing the TCO accordingly.
Finally, a partial move into mobility was made, with other services being merged into the fleet package such as public transport, car-sharing programmes and incentives for home-working.
Considering the level of complexity within fleets today, there is no general ‘recipe’ of how to move. However, in order to be successful, it is essential to consider certain factors, when moving forward. Companies should have all domains involved at an early stage, which means HR, finance/procurement, facilities/fleet, the sponsors and stakeholders. There should also be an understanding of the ‘as is’ situation, with tick box areas for improvement.
It is also important to evaluate the market offering (OEM and lessors) with an in-depth tendering process while, in parallel, drawing up a vehicle policy document that will support and drive a new fleet and mobility strategy. Listening to the employees is another vital factor in the success of the policy.
WLTP will not only generate higher taxation that needs to be managed, but it will continue to imply drastic changes on policies, which results in the need for a permanent review and adjustments process. There is also the need for a continuous review of potential key service partners, enabling each company to implement a flexible and sustainable fleet (and perspective mobility) strategy.