Renault stock crashes over 20% intraday as anti-fraud raids spark emission fears

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Updated: January 15, 2016 10:13:35 AM

Union leaders, who first reported the raids, said the searches may be linked to suspicions of emissions foul play, raising fears that an ongoing Volkswagen pollution scandal was spreading to neighbouring France.

RenaultAt around 1500 GMT, Renault shares were trading nine percent lower at 78.86 euros, having earlier slumped as low as 67 euros, a drop of over 20 percent — at that point wiping over 4 billion euros (USD 4.4 billion) off the company’s value “which is colossal”, the analyst said. (Reuters photo)

Shares of French carmaker Renault plunged over 10 per cent on Thursday as environmental officials revealed its diesel engines exceed emissions limits, although unlike the VW scandal no cheating software had been found in the cars.

France’s Environment Minister Segolene Royal made the announcement after a commission she appointed submitted test results of French and foreign vehicles, which 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.

Renault’s stock closed down 10.28 per cent at 77.75 euros after sinking by as much as 20 per cent throughout the trading day in Paris after unions first reported that anti-fraud detectives had raided sites of the carmaker possibly in connection with the emissions probe.

“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.

Suspicions of possible foul play raised fears that an ongoing Volkswagen pollution scandal was spreading to neighbouring France. The German carmarker has admitted that 11 million of its diesel engine vehicles worldwide were fitted with pollution cheating devices.

But no such devices were found on the Renault vehicles 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.

Both Macron and Royal expressed confidence in the French carmaker, in which the state holds a 19.7 per cent stake.

Early today, unions reported that French anti-fraud detectives had last week raided Renault 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 suggested, the union said, that the raids “are linked to the consequences of the Volkswagen rigged-engines affair”.

Detectives took several personal computers belonging to Renault managers, the unions said.

Royal however said later today that “the searches (at Renault) had nothing to do” with the tests related to the VW scandal.

Renault had 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 Royal and which had “not shown evidence of illegal cheating software on Renault vehicles.”

Shares in Peugeot, France’s biggest carmaker, fell 5.05 percent, although it released a statement Thursday saying it had not been the target of any anti-fraud raids. It add that similar government tests had resulted in the “absence of any anomaly” in car emissions.

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