Unfinished business…

Jonathon Poskitt, Director, Global Sales Forecasts

21 February 2019

WLTP

WLTP: Unfinished business …

The January selling rates in Western Europe indicate that the car market was well on its way to recovering from the WLTP distortions seen in the second half of last year. The selling rate stood at 14.4 mn units/year for January, versus 11.3 mn units/year back in September, with a large part of the upturn due to improvements in the German and UK markets, both of which struggled in the aftermath of the WLTP deadline on 1 September 2018.

Drilling down to the brand-level performances, Audi and Porsche are still clearly feeling the impact of WLTP. Audi did achieve positive growth in its home market of Germany, but posted year-on-year declines – ranging from 7-37% – in the other Big Five markets. Meanwhile, Porsche’s sales across the region were generally running at half the levels seen in January 2018. Given the extent to which VW Group struggled to get vehicles through the testing process, it comes as little surprise that these brands are still struggling. The group’s eponymous Volkswagen brand was also down in January, albeit in line with the wider market. Ultimately, however, what these results highlight is the disruption caused by the new emissions procedure.

“We cannot rule out temporary limitations to some of the models in our range in the second half of this year”

The next WLTP hurdle is in sight and … with a deep breath … the industry is now gearing up for the mandatory evaporation test (EVAP). The vast majority of engine-transmission variants will, once again, be tested in a bid to gain WLTP certification by the 1 September 2019 deadline. EVAP focuses on measuring evaporation emissions when a vehicle’s engine is switched off. Many brands claim to be well prepared for this latest test, with BMW and PSA confident that it will not impact their businesses. VW Group, meanwhile, looks in much better shape for this year’s deadline, but appears to be hedging its bets, stating that “we cannot rule out temporary limitations to some of the models in our range in the second half of this year”. Daimler has also noted the challenges ahead, not least because the regulations were only finalised last November.

So, even though we are now well into the New Year, it appears that the industry is facing similar challenges to those of last year, chief amongst them being the need to meet a test deadline*. While we do not expect the same level of turbulence from the EVAP test as we saw with the initial WLTP implementation, there is no escaping the fact that it could potentially disrupt European sales and production for a second time. We will keep a close eye on any developments over the coming months.

* To complicate matters even further, the initial WLTP deadline for Light Commercial Vehicles falls on the same day.