French Probe

Dieselgate's Shadow Reaches Renault

  • Why it matters

    Why it matters

    Renault is being investigated by the French public prosecutor for higher emissions levels, and is trying to reassure investors and deflect comparisons to Volkswagen’s Dieselgate scandal.

  • Facts

    Facts

    • French prosecutors last week launched an investigation into the emissions levels of some Renault models, claiming they are far higher than the levels allowed.
    • France’s environment ministry tested some Renault cars last year and found violations of emissions regulations.
    • A newspaper report citing tests wrote that Peugeot-Citroën’s C4 Cactus emits far more nitrogen oxide than rules allow.
  • Audio

    Audio

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Raindrops cover the logo of French car manufacturer Renault on a automobile seen in Paris
Uh oh Renault! Source: Reuters

Originally intended as a celebratory display of strength, managers at a recent Renault conference call instead faced a grilling about a diesel emissions probe by French authorities.

Last week, the French public prosecutor opened a preliminary investigation into the Renault, claiming that some car models emitted significantly more toxic nitrogen oxide than allowed and were more polluting on the road than in a test environment.

Although Renault posted record-breaking results in 2016, the carmaker is now fighting comparisons to Volkswagen’s Dieselgate scandal as regulators around the world take a fresh look at the auto makers under their watch.

“We are taking the inquiry with the utmost seriousness and are monitoring it closely,” Renault’s commercial director Thierry Koskas told investors during a conference call on Tuesday, following the presentation of the group’s results.

France’s largest car producer sold 3.2 million vehicles worldwide last year, up 13 percent from the previous year and an all-time high for the company.

All three of the group’s divisions – Renault, Dacia and Renault-Samsung – saw sales rise, with the core brand expanding revenues by 14 percent. The carmaker’s market share in Europe increased to 8.1 percent.

And while Renault lags behind other automakers in terms of its sales in China, the group’s compact car Kwid, produced and sold in India for $4,800, was a success and the company may now bring the model to South America.

“We are not building up any reserves as we have no reason to do so.”

Thierry Koskas, Renault's Commercial Director

But investors are wary over the car group’s entanglement in diesel cheating allegations following the VW scandal which to date saw the German automaker fork over some $22.5 billion in fines and provisions for car buybacks and repairs.

“We are not building up any reserves as we have no reason to do so,” Mr. Koskas told an investor. He said that technically and legally, the Renault case was not comparable “to that of other carmakers,” a friendly euphemism for VW.

Our cars are all homologated, he said, meaning approved for sale. “They respect the guidelines and we do not use cheating software.”

But French officials are questioning that assertion and say the high emissions levels are a danger to the health of people and animals. There are rumors about the possibility of a high fine with different figures mentioned. Some estimate a payment of up to 10 percent of sales, while others suggest a fine could be one and a half times the carmaker’s annual profit.

Renault is no stranger to such inquiries. Last April, the French environment ministry found the company guilty of excessive emissions in some of its car models and Renault’s Chief Executive Carlos Ghosn announced technical improvements would be made to the vehicles affected, and fixes for cars that have been sold or being produced.

But on Tuesday, Mr. Koskas conceded that Renault is behind in fixing cars which are already on the roads and said customers still were not able to bring their cars into the workshops for their motor controls to be fixed.

The French prosecutors’ latest inquiry could also extend to another of the country’s carmakers, Peugeot-Citroën.

According to the daily newspaper Le Parisien, the Joint Research Center, a European Commission laboratory in Italy, found that under real driving conditions, the C4 Cactus emits up to 470 percent more nitrogen oxide than rules allow. A Peugeot-Citroën spokesperson said the company was surprised by the findings, adding that previous tests by France’s environment ministry had found no flaws with the engine.

 

Thomas Hanke is Handelsblatt’s correspondent from France. To contact the author: hanke@handelsblatt.com