NEDC (New European Driving Cycle) is outdated and will be replaced by the WLTP, a new protocol to measure vehicles fuel consumption, CO2 and pollutant emissions. The so-called Worldwide Harmonized Light Vehicles Test Procedure provides a more realistic picture of vehicle usage, with average CO2 values expected to rise. As a consequence, companies that have included a CO2 limit in their car policy will need to analyze, reconsider and likely also adjust it.
WLTP is based on real driving data, aligned with actual road performance. This prevents partial or excessively favourable display of usage. It is expected under WLTP all emission values will be up to 25% higher than measured by NEDC. Subsequently wil be taxes and pricing, however vehicle taxation is a country-specific matter and therefore the exact impact will differ between countries.
When and for whom?
Given the importance of CO2 targets for the economic performance of vehicle manufacturers worldwide, WLTP also aims to harmonize test procedures on a global level, in order to create an equal playing field in the market. Beginning in September 2018 the WLTP will premiere and in 2020 NEDC is rendered obsolete worldwide. Organisations should prepare themselves for higher average CO2 values and proactively adapt their car policy.
Impact on your fleet
Although there will be a transition phase from NEDC to WLTP it is adviced to start preparing now. An adjustment of the car scheme can be worth considering for your organization. Do you want to look ahead and talk about the impact of WLTP on your current fleet policy? Your Business Lease account manager will be happy to support you with reviewing your current Car Policy. If you have any questions, please let us know.
Predicting how mobility exactly will look like is difficult. Future innovations will probably blow our 2018 minds, but one thing is for sure: it is all about getting from A to B, flexibly and in a as much as possible sustainable way. Business Lease stays on top of coming changes and co-worked with its Innovation Lab in a thorough research on the Future of Mobility. A sneak preview of their findings.
We live in a fast digital era where technology creates new opportunities every single day. The Netherlands is front runner in a lot of innovations. Recent research in The Netherlands has identified a number of trends extending onto the horizon of 2030. To name but a few:
The trend towards larger cars in premium brands continues
Diesel dips, whereas alternative powertrains go up
With cities getting overcrowded the transition from ownership to usership increases
Flexible pay-per-use models will take off
New technologies enable self-driving and flying cars
High-end telematics increase the safety of road transport
The Internet-of-Things further personalizes mobility by connecting cars to other data sources
Drone taxis in Dubai
The changes are already tangible and go even further than many of us realize. Verkuil: ‘The taxis in Dubai are drones and there are smart refrigerators that tell you when you’ve run out of cheese or eggs. Developments are moving incredibly fast, including in the automotive world. Two years ago, for instance, Business Lease participated in a test with autonomously driving cars on the A2 Motorway in the Netherlands. It’s high time we think with businesses about the changes and help them create a plan for the future. This allows them to respond to new trends, such as creating a more flexible mobility strategy for employees who prefer not to have company car.’
Greener and greener
We also know there will be way less cars and cars will be greener. Companies as well as drivers want to contribute to a smaller ecological footptint. There will be less cars than now of which the majority being EV. Emission of C02 further reduces. And vehicle fleets become more and more sustainable: future cars will last longer because they have less moving parts.
These changes impact mobility
Key to future success is real-time fleet management that meets ones personal preferences. Business Lease already offers plenty of flexibility to both employer and user, with an approach that is responsive to current and future conditions. We are continuously developing products and services through which we offer users the mobility solution that best suits his or her needs.
On top of that our Innovation Lab is dedicated to developing innovative concepts that add both value and growth to current fleets. Our Innovation Lab answers customers’ direct needs by accelerating ideas into concrete measures and tangibles. To give an example, currently a test in fuel savings is running with 5 customers taking part. It appears that cars rigged with such an aerodynamic skid plate experience a fuel consumption reduction of around 15%.
Impact on your business
So if it’s about flying cars, passenger drones, public transport passes, talking traffic, e-bikes, self-driving SUVs or any other form of flexible and sustainable ways of transportation: future innovations will ask for adapted fleet strategies.
The transition to a flexible, future-proof fleet can be complex, but Business Lease is here to help. Please do not hesitate to contact us and share thoughts about your current and future needs. Our tools – think workshops, profound questionnaires etcetera – can even help to explore the (un)known.
The leasing standard IFRS16 is effective per January 2019. This has a drastic impact on every company using rentals or or leasing to obtain access to assets.
What is IFRS16?
The new financial reporting standard on leasing (IFRS16) aims to improve transparency and requires the lessees to recognize assets and liabilities arising from a lease, including their lease cars. Important changes are:
The new requirements eliminate nearly all off-balance sheet accounting for lessees
A liability, equivalent to the lease rental amount, will appear on the balance sheet
The asset will be depreciated on a straight-line basis
The interest will be charged to the P&L on a reducing balance basis
The accounting benefits of sale and leaseback transactions could differ
Changes to the lease accounting standard have a far-reaching impact on the lessees’ business processes, systems and controls.
The new IFRS16 will require changes in accounting. Assessment of all contracts will be a very data-intensive process, more than you were used to. Under IFRS16 you may choose not to recognize assets and liabilities for leases with a lease term of less than 12 months. Lease terms of 12 months and older should be on balance. All relevant facts and circumstances that offer you an economic incentive should be considered. And there might be strategic impacts on KPIs, remuneration schemes, leasing strategy and loan covenants too.
Start preparing now!
So the new standard will have an impact on your organization. For a smooth transition, it’s necessary you start preparing now by:
Identifying all leases with an inventory of all lease contracts and examine the agreements;
Evaluating the impact on financial statements, business processes and internal controls, as well as the potential regulatory and tax implications of the changes;
Exploring whether current systems can easily support this change or if there is a need to evaluate and deploy a new solution.
Business Lease is here to help. Do not hesitate to contact Hans Kolff to be informed and be guaranteed a smooth transition to the new IFRS16. Read more on our IFRS16 page.