Renault accused of emission fraud, carmaker denies; impact in India and international markets explained

Dust hasn't even begun settling on the massive Volkswagen emission scandal and Renault is already under the radar for following in the footsteps of its German competitor.

By: | Published: March 16, 2017 12:28 AM
While the entire report hasn't been made public yet, parts published claim that independent testing of Clio and Captur models revealed high discrepancies between the results declared in the laboratory and on the roads. (Reuters)

Dust hasn't even begun settling on the massive Volkswagen emission scandal and Renault is already under the radar for following in the footsteps of its German competitor. French newspaper Libération, today in a report published excerpts from an investigation report. The investigation was carried out by investigators from the Directorate-General for Competition, Consumer Affairs, and Fraud Prevention (DGCCRF). The blame on Renault is plain and simple – it used methods and technology to pass through emission tests in a fraudulent manner. This is the same thing that we witnessed in the Volkswagen case, wherein the company intentionally fitted a device that could alter engine behaviour during testing to falsely pass through.

While the entire report hasn't been made public yet, parts published claim that independent testing of Clio and Captur models revealed high discrepancies between the results declared in the laboratory and on the roads. The report goes on to claim that the Clio turned out to be a massive 305 % over the prescribed limit for CO2 emissions, whereas the Captur was even higher at 377 % over the limit.

Commenting on the matter, DGCCRF said, “These results make it possible to suspect a fraudulent device that specifically modifies the operation of the engine to reduce emissions of NOx”. Following this disclosure, a judicial enquiry has already been ordered into the matter. Another interesting yet unsurprising claim the report made is that internal emails found during the investigation revealed that Renault officials knew about this cheating taking place.

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NOx refers to nitrogen oxides, which are toxic gases that are more detrimental to health than CO2 and can cause cancer, asthma and death. Volkswagen too used the cheating device to mask the extent of NOx emissions in its engines.

The French newspaper has also claimed that this emission scandal could involve as many as 9,00,000 vehicles and Renault could face a fine of up to Euro 3.5 billion.
What does Renault have to say?

Renault, however has denied all the allegations and has issued an official statement claiming the report to be “unbalanced.” In an official statement, Renault has stated “Groupe Renault has acknowledged the publication of an unbalanced national newspaper article related to the "emission" case. This article alleges to quote selected excerpts from a report drafted by the DGCCRF. Groupe Renault will not comment on a current investigation, the latter being confidential by nature and Renault having as yet no access to the case. As a consequence, Renault cannot confirm the veracity, completeness and reliability of the information published in said article. Renault will prove its compliance with the regulations and reserves its explanations for the Judges in charge of investigating this case.”

While it's true that the newspaper has published only parts of the investigation and not the entire details, the Volkswagen scandal too was disclosed due to independent testing, like it has been carried out in this case.

Commenting on the use of a device to fool testing equipment, Renault said “Groupe Renault reminds that none of its services has breached European or national regulations related to vehicle homologations. Renault vehicles are not equipped with cheating software affecting anti-pollution systems.”

Possible impact in India

Impact of this development on Indian arm of Renault seems unclear right now as the models mentioned in the report are not sold in India. Details of the engines tested too haven't been disclosed. Interestingly, the Captur is sold in parts of Europe with the same 1.5 litre dCi K9K motor powering the Duster. There is no mention in the French newspaper's report of this engine being a part of this potential scandal yet. However, if this engine is one of the suspected ones and is proven to be rigged to pass emission tests, Indian owners of the Duster as well as the Nissan Terrano might have to look for plug-in solutions at a later stage from the company.

The Kaptur is scheduled for an Indian launch later this year but the Indian model is going to be different from the internationally sold Captur.

International Impact

While details are few and scattered right now, this report comes as a major shock to the world because it raises massive doubts on the credibility of global carmakers with respect to critical areas such as environment. If proven right, Renault could be in for facing major heat just like Vol had to and will continue to face for a long time. While the worst case scenario in the newspaper's report has been claimed to be around Euro 3.5 billion, the actual cost could run into multiples of this amount. Volkswagen, after admitting to being guilty in the US, was asked to pay a civil fine of $ 4.3 billion. This amount, however was a small part of the $ 17.5 bn, the company has to pay to its customers, dealers and environmental agencies for settlement. With the vehicle count running close to a million, Renault too could be looking at a tremendously excruciating figure to cough up, if proven guilty of the claimed charges.

In addition, there's the immediate financial impact of company shares witnessing a decline, which has already begun.

It'll be interesting to see how this case unfolds over the next few days as legal batteries from both camps are going to flak each other with everything that they've got. What's consoling though is that chances of Renault escaping through despite any wrong doings are slim since a much larger, richer and powerful Volkswagen too couldn't defend itself eventually after initially declining of any intentional wrongdoings.

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