WLTP registration spike: what goes up, must come down
1 September was D-Day for OEMs: from that day onwards, only WLTP-type approved cars can be sold in the European Union. Most of the remaining NEDC stock had to be registered before this date to avoid a sales ban. That has indeed translated into a dramatic increase in registrations in the 8th month of the year.
August registrations were up 49 percent in Spain, 40 percent in France, 25 percent in Germany, 23 percent in the UK, 9.3 percent in Italy (in an otherwise shrinking market) — and 53 percent in Belgium, Europe's sixth-largest market. Sales are usually slow in the summer months, but the adjusted annual selling rate (SAAR) rose to an astounding 18.4 million vehicles in August, from an already-robust 14.7 million units in July, Autonews reports.
Sales push and day registrations
To shift their soon to become unsellable stock, OEMs have been discounting heavily, both for private customers and fleets. Next to that, there is a phenomenon called ‘tactical registrations’: car makers and their dealers registering cars for one day and then sell them off as nearly new when the due date has passed.
In both cases, margins on these cars are virtually non-existent. Indeed, the registration spike gives little reason to celebrate, even more so now that in the coming months, OEMs are unable to deliver many of their new WLTP models because of the delay in the type approval procedures. September and October promise to see a substantial dip in the new car statistics.
Impact on used car market
The many cars that have been preregistered in July and August need to find a buyer in the coming months. “We expect this to have an impact on residual values of young used cars in Germany,” says Christof Engelskirchen, Managing Director Consulting & TCO Solutions at Autovista Group. “Zero-kilometre vehicles offered at great discounts will put pressure on 1 to 2-year-old cars with some mileage on the odometer. However, this effect should level out by the beginning of 2019”.
Moreover, against the greater number of preregistered cars stands the temporary unavailability of new WLTP cars, which relieves some of the sales pressure. “In fact, in some countries a preregistered NEDC car could have a lower CO2 rating and therefore offer tax benefits, making the car more desirable than a new WLTP one,” explains Mr Engelskirchen.
He believes that WLTP could drive down residual values for individual models if the CO2 values go up and the car moves into another tax band. “Much depends on the market, though. In Germany, for instance, the impact of WLTP will be small: for example, if your vehicle emits 20 g more CO2 under the new WLTP regime, you will pay just 40 euros more per year. In markets with tax bands or those where taxes rise more elastically with higher emissions, the impact will be more substantial and may result in a shift in demand.”
Watch Fleet Europe's short video "WLTP: 7 questions and 7 answers" and "WLTP, NEDC, NEDC correlated, RDE: what's it all about" to learn more about the new type-approval and how it impacts company car drivers, fleet managers, OEMs and leasing companies.
