WLTP tests, a problem for manufacturers: half of the Volkswagen fail the tests

Cars on sale in the European Union will have to comply, starting this very month of September, with the requirements set by the new Worldwide Harmonised Light Vehicles Test Procedure (WLTP) if they want to be marketed in the various EU markets. The WLTP tests are what will determine the emissions and consumption figures of the new models that brands put on sale, but also those of all models already on sale, and the results obtained so far are certainly worrying.

To a greater or lesser extent, virtually all vehicles on sale in European markets exceed the figures obtained previously under the NEDC (New European Driving Cycle) test standards, which have been in force until now, when tested under WLTP. This will have significant consequences for vehicle prices, since from now on many models will either have to pay the registration tax or increase the amount they currently pay, because the new results push them up a level in the duties of the tax scale.

But beyond the price increases many models will experience with the introduction of WLTP tests, the entire car industry is seeing its economic results compromised this year with their implementation, given the significant delays piling up in carrying them out for all models on the market, both those already on sale and the new models about to be presented.

“The new tests are more cumbersome and take two to three times longer to carry out than in the past, and even limited-edition models must be tested separately,” recently stated Thomas Zahn, Head of Sales and Marketing at Volkswagen. Moreover, these delays in carrying out WLTP tests for each car have multiplied exponentially, because it is no longer enough for a single general test to cover the entire range of the same vehicle; instead, each engine and trim version must pass the test individually, since differences in weight, engine, standard and optional equipment, and even wheel size individually affect each car’s emissions and consumption.

WLTP tests will cut manufacturers’ profits during this first year

And if we add to this that many of the vehicles currently on sale clearly exceed the new limits set for type approval, we can grasp the true dimension of the problem car manufacturers face this year. In view of the results obtained in the first WLTP tests carried out, many manufacturers have been forced to rework their economic plans and cut their profit expectations because of the slowdown that the introduction of the tests will cause in the market and in the automotive sector.

Most car manufacturers expect that the production rate of their various assembly lines will suffer a significant slowdown until the end of this year, 2018, and some of them may even stop to cease producing models whose “solution” to avoid failing the WLTP tests has not yet been incorporated.

The coming months will be a real challenge for us —says Thomas Zahn— although we expect very strong deliveries next December

Volkswagen: 7 of the 14 models fail the WLTP tests

To cite one example, Volkswagen has already announced that only half of its passenger cars in Germany pass the WLTP tests for consumption and emissions. For this reason, the Wolfsburg manufacturer has not yet obtained —according to the Reuters agency— the regulatory approval for seven of its current 14 main product lines. The most popular version of the Golf, the brand’s best seller, is among the models that still have to pass the aforementioned tests, and according to the set schedule, its tests are not expected to finish before the end of this month of September.

Due to the significant accumulated delays in carrying out the tests by the various approval bodies and agencies, most car manufacturers forecast a sharp slowdown in their production during this coming quarter. This will lead to the introduction of new temporary employment regulation procedures, if not the cessation of production on some assembly lines, with the consequent layoffs and shift terminations.

The slowdown also has a significant knock-on effect across all distribution chains for components and accessories that supply parts to the automotive sector, which in turn will also have to temporarily reduce employment in their factories in order to balance their companies’ economic accounts.

Various market analysts foresee declines in brand profitability due to delays in homologation certifications. Daimler, Volkswagen, Valeo,… and many other manufacturers have already, for this reason, cut their commercial and economic expectations for the current year. On this matter, Volkswagen forecasts only a 2 percent profitability during the third quarter of the year, compared with the 5.5 percent achieved during the second quarter.