Renault Investors Rattled by Report on Faulty Car Emissions
(Bloomberg) -- Renault SA shares fell on a report that anti-pollution devices on two of the French carmaker’s diesel models failed to work under a wide range of driving conditions.
The investigation by experts at the University of Burgundy found that two systems in Captur and Clio IV cars that were designed to filter emissions didn’t kick in at many speeds and outside temperatures, Le Monde reported Monday, citing the results. The shares fell as much as 3.2 percent in Paris trading.
The findings could put Renault among a host of European carmakers to run afoul of rules on controlling emissions for cars running on diesel. The manufacturer three years ago recalled diesel vehicles and upgraded emissions systems to quell a storm about possible deceit of the kind committed by Volkswagen AG. The bigger German rival was found to have outfitted its cars with so-called defeat devices that disabled anti-pollution controls.
In response to the Le Monde report, a spokesperson for Renault said by phone that all its vehicles comply with regulations and the company did not use defeat devices.
French authorities are investigating the carmaker, along with VW, Fiat Chrysler Automobiles NV and Peugeot-maker PSA Group, for possible emissions misconduct. Renault has been named as a material witness in the case, and hasn’t been charged. A spokesman for the prosecutors’ office declined to comment.
French authorities have asked their European counterparts for clarification on whether anti-pollution systems are allowed to be equipped with devices that would modulate emissions control in order to protect motors from accidents or damage, Le Monde reported.
In 2017, Barclays analysts estimated that any fine wouldn’t go beyond 1.68 billion euros ($1.89 billion), while Deutsche Bank put forward an estimate of 1.1 billion euros. The French carmaker hasn’t made any financial provisions for a fine, while it set aside 44 million euros for the recall, according to its latest annual report.
Investor jitters about Renault’s exposure to the VW-triggered diesel scandal come at a bad time for the company. The manufacturer’s partnership with Nissan Motor Co. has been in turmoil since November, when former Chairman Carlos Ghosn was arrested for financial misconduct in Japan. Renault owns 43% of the Japanese carmaker, which is set to report on Tuesday its lowest annual operating profit in a decade, hurt by slumping U.S. sales, aging models and a product cycle that’s out of sync.
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