Interview: WLTP’s impact on the DACH region

20 February 2019

Interview: WLTP’s impact on the DACH region

20 February 2019

Cameron Roberts

The DACH region (Germany, Austria and Switzerland) is an important cog in Europe’s automotive market. With WLTP implementation now in full swing, many of the EU’s biggest markets look to Germany as it has fully adopted WLTP. In particular, Austria struggles to combat unexpectedly high NEDC-correlated figures and Switzerland, which is not required to use WLTP figures as it is outside the EU, has implemented new legislation to prevent imports of cars that have not been WLTP-homologated.

To find out more about the impacts of WLTP in the DACH region, we spoke to Roland Strilka, Director of Valuations at Autovista Group.

Hi Roland, thanks for joining me today. What’s your role at Autovista Group and how does this link to WLTP?

I am the Director of Valuations here at Autovista Group.  The new WLTP testing procedures measures fuel consumption and emissions and this is having an impact on vehicle specifications. The equipment level of a car affects its weight, rolling resistance and aerodynamic resistance and is now factored into the CO2 figure under WLTP testing. This in turn influences the new price of a car in many countries and there is a knock-on impact on residual values (RV). So I look at both the immense complexity that WLTP creates and also the tax implications for new cars in the market.

I understand you have specialist insight into the DACH region, so let’s start with Germany as it has adapted its tax regime to align with WLTP. Could you give a brief overview of what this entails and what impact it will have?

You’re quite right, the tax regime has been created to align with the region’s complete adoption of WLTP. Germany is one of the early adopters to go ‘all in’ on the scheme.

Germany is one of the few countries that face a minimal impact from WLTP. This is because Germany does not have registration tax related to CO2, meaning drivers only have to pay a higher annual tax for their cars. This means that the effect of WLTP in terms of cost to the driver is very limited.

It is going to be difficult for other European countries to follow suit in the short term. In countries where WLTP will cause widespread change, like Spain, France or Austria for example, it is going to have a more noticeable cost-impact on the driver. On the other hand, it is good for these countries as they can see how full implementation plays out in Germany and over the long term be more prepared for WLTP.

Let’s focus on Austria. From my understanding, Austrian drivers have been subject to a large hike in registration tax recently. What is influencing this?

The reason for this tax rise is that the correlated-NEDC figures, which were designed to be similar to regular NEDC figures, are on average much higher than expected.

The registration tax called NoVA is based on the CO2 level of an equipped car including options and it defines what tax level you have to pay for the whole car. This means that it can lead to quite substantial rises in costs that drivers have to plan for when buying a new car. Consider that CO2 emissions on average rise by approximately 29% in comparison to the NEDC regime, this equals more than a doubling of the registration tax using NoVA, averaging from about 1200 to almost 3000 Euros.

And what is the state of play in Switzerland? It is not obligated to use WLTP but has had to create new legislation to avoid becoming a ‘dumping ground’ for cars penalised elsewhere. What does this legislation entail and how does it combat the impact of WLTP on surrounding countries?

The way that Switzerland is dealing with WLTP from an outside perspective is different: drivers can still register a car not tested under WLTP but cars that have not been tested under WLTP can no longer be imported. This has been in place since 1 September 2018.

Because of this move, the country did not see dramatically increased registration numbers in August 2018 that we saw elsewhere.

Switzerland is also bringing in legislation with CO2 thresholds for importers. This means that drivers do not pay for excess CO2 emissions from vehicles, importers do. For example, if a car parc of an importer passes a certain CO2 level, then it will be forced to pay a fine.

Finally, what’s your dream car?

I have to say a Mercedes Benz W123 series, the CE280 coupe version. I saw this car when I was a boy and I promised myself that I would own that car one day. But I also would gladly take a BMW 507.

Of course I couldn’t use that for daily drives so on that front I would say a Range Rover. For me, a dream car has to be fit for purpose and while a Range Rover would be great for transporting the family, the BMW 507 would definitely be better when driving to the ice cream dealer on a nice summer evening. So it’s something that changes regularly in my mind as long as my outdoor parking space has not transformed into a big hall for luxury cars.