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Will European Fuel-Efficiency Tests Get More Realistic Under New Rules?

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2013 Volkswagen Golf BlueMotion (European model), 2012 Paris Motor Show

2013 Volkswagen Golf BlueMotion (European model), 2012 Paris Motor Show

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When we report on European market cars, we'll often advise you to take their official fuel consumption ratings with a pinch of salt.

The current New European Drive Cycle (NEDC) test simply isn't very real-world relevant, unrealistically inflating a car's economy potential.

That may change in the future, though the prospect of a new test is already causing headaches for carmakers.

Automotive News Europe reports that the European Union is considering a new standardized economy test, known as the World Light Vehicle Test Procedure (WLTP).

It's likely to make economy testing much more realistic, closer to the real-world economy of vehicles. For consumers, long frustrated by cars that can miss out on official figures by 20 mpg or more in the worst cases, it's a very good thing.

For manufacturers though, the new test could prove particularly problematic.

MORE: Why European Gas-Mileage Ratings Are So High--And Often Wrong

Most of Europe's governments tax and regulate vehicles based on CO2 emissions.

Many European countries, for example, have a tax break for cars emitting under 100 grams per kilometer of carbon dioxide--equivalent to 54.5 mpg. Europe already has in position regulations requiring average fleetwide CO2 of 95 g/km by 2021.

But change the way cars are tested without changing the way they're taxed and manufacturers then have to work a lot harder to hit those targets.

A car that goes from 54.5 mpg in NEDC down to say, 40 mpg in the new tests, is now producing 136 g/km of CO2. For consumers, that makes the car less attractive, as it costs them more to tax under current legislation.

More to buy, too: Investment firm Exane BNP Paribas estimates that WLTP could add 1,000 Euros ($1,370 at current exchange rates) to the cost of every new car.

That could stretch some automakers to breaking point. French automakers Renault and Peugeot-Citroen, and Italian firm Fiat, already have the lowest fleet-wide emissions in Europe--but all have the tightest margins, too.

MORE: Why Can't We Buy Cars That Do 60, 70, Or 80 MPG?

Exane BNP Paribas analyst Stuart Pearson tells Automotive News that the cost of improving CO2 ratings by one gram is about 30 Euros. If WLTP leads to emissions 20 percent above that of NEDC, the industry cost of selling 14.3 million cars (a 2020 estimate) would be 11 billion Euros ($15 bn).

That's around $1,095 per car--when some mass-market automakers only make $680 per car in a good year.

Some industry analysts say it could boost sales of electric cars and bring new business to technology suppliers.

And of course, consumers would finally have cars with more realistic economy figures to choose between.

The upshot though is that unless Europe also changes its taxation system to take account of vehicles producing higher levels of CO2 in testing, both automakers and consumers could find themselves paying a great deal more to own a car in the future.

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