Johnson & Perrott

A Rough Guide – from NEDC to WLTP – Vehicle Pricing Changes & How It Affects Companies/Drivers

In brief – from Sept 1st 2018 a new system to measure vehicle Co2 emissions & statistics will be in place and the price of vehicles will change according to the results of these new tests.

The current testing system has been in place since the early 80s (NEDC) and the results of these tests gave us our Co2 readings. The vehicle registration tax (VRT) of a car is based on this Co2 result. The new system (Worldwide Harmonised Light Vehicle Test Procedure WLTP) from September 1st onwards will give us a new set of results based on a more ‘real world‘ testing scenario so the prices of vehicles will change according to their new Co2 readings. The higher the reading the higher the VRT.

The likelihood is that under the new testing regime Co2 readings will be higher across the board and therefore the price of a car will be higher. The recommended retail price (RRP) from the manufacturers will now incorporate a higher VRT amount so the cost of cars will rise.

What does this mean for you?

1. As a driver –

  • The BIK paid is based on the price of the car + annual mileage. Therefore the higher the price of the car the more BIK that is paid
  • E.G. a driver in an early 2018 car that cost Eur35,000 will pay less BIK for the exact same car if it costs more after the 1st of Sept 2018 (yes car prices increase all the time but this is going to be above and beyond normal increases by all indications)
  • Coupled with the standard VRT increase any optional extras added to the vehicle will also now increase the VRT. Their addition will now increase the Co2 reading where it didn’t under the old testing system
  • Under the old test the Co2 readings come from the standard car, options made no difference to the official rating used to calculate VRT. Now under the new test any optional extra will affect the VRT and increase the overall price of the car plus the cost of the actual optional extra. Larger alloy wheels for example increase a car’s Co2 reading. A sunroof adds weight to a car and the heavier the car the more Co2 it puts out
  • Every extra will now incur an extra cost on top of the manufacturers price. eg if a car has an optional extra that on paper costs Eur1200 from the manufacturer, this option will also increase the price of the car by the increase of Co2 it creates

2. As a customer –

  • Vehicle prices will increase across the board and therefore cost companies more to buy or lease
  • As the RRP is higher the cost price will be higher & the monthly payments will increase
  • The vehicles will cost more to tax
  • Certain vehicles will not fit within policy limits
  • Many manufacturers will temporarily cease production of all models or certain models
  • Some models will either require updates to the engines in order to lower their emissions or will go out of production altogether
  • The lead times for new orders from the factory will dramatically increase in length as certain models will have a paused production or have to wait for new WLTP Co2 test results, price changes, VRT increases etc
  • BIK figures will increase for staff in new cars after the 1st of Sept 2018

In summary

  • It is anticipated that the New WLTP testing system will increase vehicle pricing across the board
  • The exact increases are as of yet unknown or available from manufacturers as they have not been released
  • Car ordering will be affected – with long lead times, the potential for no orders being taken or significant price increases possible

More info –

check the following link for more information – Worldwide Harmonised Light Vehicle Test Procedure (WLTP)