Renault shares fall on emissions cheat allegations

RENAULT SA’s shares slumped amid concern that the French car maker may face hefty fines over allegations of breaching emissions rules and top management may have been involved in the fraudulent strategy.

Renault sank 5 percent to €78.13 (R1 060), a three-month low, at 9.35am after reports yesterday in the French media that the country’s economic-fraud watchdog found the vehicle maker had misled customers about how much its models pollute.

The company didn’t breach European or national vehicle standards and its models “are not equipped with cheating software affecting anti-pollution systems”, Renault said in a statement yesterday, reaffirming the company’s position.

Paris prosecutors opened a preliminary inquiry into the car maker’s vehicle emissions in January after allegations its products were a pollution hazard.

French newspaper Liberation reported on Wednesday the Economy Ministry’s fraud office said in a confidential report to prosecutors that the carmaker aimed to skew test results. As many as 900 000 cars with emissions breaching standards could have been sold, according to the newspaper.

Report ‘unbalanced’ Renault called the newspaper article “unbalanced” and said it hadn’t seen the investigators’ report. The French fraud office said in a report that chief executive Carlos Ghosn was responsible for the fraudulent strategy, AFP reported.

Chief competitiveness officer Thierry Bollore, however, said Ghosn had delegated decision-making authority, AFP said.

A Renault spokesperson confirmed Bollore’s comments.

Volkswagen scandal concern over emissions has shadowed the car industry since German competitor Volkswagen revealed in September 2015 that some of its diesel models carried engine software that switched pollution controls on only during emissions tests.

Authorities across Europe are focusing attention on whether technology enabling emissions controls to switch off at certain temperatures violates legal conditions that allow the shut-downs as an engine-protection measure.

Under French law, carmakers found to have cheated on the vehicle-certification process can be fined as much as 10 percent of their average revenue for the three years prior to the incident.

Executives risk up to two years in jail and €300 000 in fines. In a note, Barclays analysts estimate the fine wouldn’t go beyond €1.68bn.

“This destabilises the entire company at a time when it should fully focus on preparing the next strategic plan,” which will be unveiled in October, they wrote. – Bloomberg