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Renault tumbles after government raid in emissions probe

Carmaker says it’s cooperating with the investigation.

Renault offices in France were raided by government fraud investigators as part of a probe into vehicle emissions, raising the specter of a VW-type scandal and sending its shares down as much as 23%.

Renault is cooperating fully with the investigation, the company said in an e-mailed statement on Thursday. Agents from the Economy Ministry’s fraud office visited three Renault sites last week, the company said, confirming earlier reports. French peer PSA Peugeot Citroen said it wasn’t raided.

Automakers have been under renewed scrutiny since September, when US regulators said VW cheated for years to make its diesel cars appear cleaner burning that they are.  The rigged engines were installed in 11 million vehicles worldwide. 

As part of the backlash, French authorities started a probe in September into whether VW deceived customers about the emissions levels of its diesel cars and promised to expand the probe to cover all carmakers, including Renault and PSA Peugeot Citroen. Separately, the country’s environmental regulator began randomly testing vehicles to check differences between emissions results found in laboratory testing and real-world figures.

Random Tests

Four Renault models had been tested by the end of last month, part of the effort to screen as many as 100 cars — including 25 from Renault. Officials overseeing the effort have signaled that additional tests under way probably won’t “uncover the presence of a ‘defeat device’ in Renault’s vehicles,” the company said in its statement. “That’s good news for Renault.” 

Renault dropped 7.7% to 78.97 euros at 2:28pm in Paris after falling as low as 67 euros and wiping out 5.8 billion euros ($6.3 billion) in market value. Peugeot fell 3.6%. Other European automakers declined as well. Fiat Chrysler Automobiles tumbled 7.3% in Milan and Daimler slipped 3.2% in Frankfurt.

Diesel engines are crucial for French automakers — at the time the VW scandal broke, the technology accounted for at least 60% of their European sales. Unlike Volkswagen, though, Renault doesn’t sell cars in the US, where emissions standards are tougher. VW faces tens of billions of dollars in potential penalties in the US.

The fraud office began an investigation in parallel with the French government’s random environmental testing, the company said. The facility in Lardy is Renault’s main site in France for engine development, said Florent Grimaldi, an official with the CGT union there. The raids were earlier reported by Agence France-Presse.

“For several months, work has been ongoing on emission tests at the Lardy site and the departments that were raided were those of certification and adjustment of engine control systems,” Grimaldi said. “We have been asking for more resources for months at Lardy to work on pollution control.”

©2016 Bloomberg News


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