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Renault shares plunge after failed pollution tests, raids
[Paris] Shares in Renault plunged by 10 per cent on Thursday after the company's diesel cars failed government-ordered pollution tests and investigators raided its facilities, raising fears the French carmaker could be caught up in an emissions scandal.
Officials said however no pollution cheating software was found on Renault cars, as Germany's Volkswagen admitted in September having installed on 11 million diesel vehicles worldwide, sparking a scandal that could cost it tens of billions of dollars.
But with Renault having invested heavily in diesel engines, investors quickly dumped its shares after unions revealed that French anti-fraud detectives had last week raided several of the company's facilities.
"Agents from the (anti-fraud unit) DGCCRF intervened in various Renault sites last Thursday," the CGT Renault union said in a statement.
The probe targeted the sites' engine control units which, the union said, makes it possible the raids "are linked to the consequences of the Volkswagen rigged-engines affair".
Detectives took several personal computers belonging to Renault managers, the unions added.
Renault played down the raids, saying they were part of a probe by the DGCCRF aimed "to confirm definitively the initial analysis conducted" at the behest of the French government and which had "not shown evidence of illegal cheating software on Renault vehicles."
France's Environment Minister Segolene Royal, who had ordered independent emissions tests of vehicles after the VW scandal broke, said later on Thursday that the checks had not found any cheating software on Renault cars.
However, she said the tests found carbon dioxide and nitrogen dioxide emissions in Renault cars to be too high, as were those of several non-French automakers that were not identified.
Tests for certification of vehicles is done in laboratories, so the results of these tests under actual driving conditions were expected to be higher.
Royal added that "the searches (at Renault) had nothing to do" with the tests related to the VW scandal.
And French Economy Minister Emmanuel Macron, on a visit to Berlin, was quick to note that Renault was "not in any way a comparable situation" to that of troubled VW.
The software on VW engines could detect when the vehicle was undergoing pollution tests in garages and lower emissions, but then allow the car to pollute much more when being driven on the road.
Both Macron and Royal expressed confidence in the French carmaker, in which the state holds a 19.7-per cent stake.
However the raids spooked investors.
"The news triggered a massive selling movement, it's a disaster that's pulling everybody down," said one Paris-based analyst, referring to falling auto stocks across Europe.
Renault's shares closed down 10.28 per cent at 77.75 euros.
Shares in Peugeot, France's biggest carmaker, fell 5.05 per cent, although it released a statement Thursday saying it had not been the target of any anti-fraud raids. It added that similar government tests had resulted in the "absence of any anomaly" in car emissions.
Renault and Peugeot have invested heavily in diesels, and the engines account for over half of their sales in France. The two companies have much to lose from any shift away from the technology over environmental concerns.
The Renault news weighed on auto stocks across Europe, with BMW, Daimler and Volkswagen all losing more than three percent at the close of trading in Frankfurt.
Volkswagen is facing possible fines that could reach into the tens of billions of dollars in the United States alone over the scandal, and faces probes in other countries as well.
Diesel engines can be more fuel efficient and produce less carbon dioxide, a key pollutant in global warming and which environmental regulations had forced them to cut.
But the engines produce more nitrous oxide, another pollutant, and carmakers have invested huge sums to make diesel engines cleaner.
Software on the Volkswagen engines reduced nitrous oxide emissions when vehicles underwent testing, but running the engine this cleanly on the road would come at the expense of acceleration.
Fiat Chrysler shares, meanwhile, crashed after a report saying the company has been accused of conspiring to inflate its US sales figures.
The company said the claims were unfounded, but its shares tumbled 7.9 per cent in Milan and were down 5.5 per cent in midday trading in New York.