January 15, 2016 / 12:51 PM / 3 years ago

Renault shares slide further despite emissions assurances

PARIS (Reuters) - French assurances failed to impress Renault investors on Friday over concerns the carmaker could be drawn into a damaging diesel emissions probe in Volkswagen’s wake.

The logo of French car manufacturer Renault is seen on a totem in front of a dealership in Vendenheim near Strasbourg, France, January 14, 2016. REUTERS/Vincent Kessler

Renault shares fell further even as officials reiterated it had not been caught cheating on engine emissions, a day after raids at three of the carmaker’s facilities came to light.

The assurances “alleviate some of our concerns that the use of defeat devices ... affects other automobile companies than Volkswagen,” said Yasmina Serghini, Senior Credit Officer at debt rating agency Moody’s.

But the French investigation is ongoing, she cautioned in a note, and “other countries such as the UK have similar procedures in place, the results of which are still unknown”.

Renault shares, which tumbled 8.9 percent on Thursday, fell a further 3.4 percent to 75.13 euros, outpacing the European auto sector’s 3 percent slide amid investor wariness in the wake of the Volkswagen scandal.

Officials reiterated that no “defeat devices” had been found on Renault models tested in a French follow-up investigation, launched after VW admitted using such banned software to cheat on U.S. nitrogen oxide (NOx) emissions tests.

The French probe has already found emissions from Renault diesels - and several other unnamed brands - in excess of statutory limits that had been met in European regulatory testing, widely acknowledged to be flawed.

The environment and economy ministers, Segolene Royal and Emmanuel Macron, scrambled on Thursday to deny that Renault had been caught using software cheats - which typically set out to meet pollution limits only during official tests.

In a statement, the carmaker also said French officials “consider that the investigation in progress has not revealed the presence of cheat software in Renault vehicles”. A spokesman declined further comment.

Renault had disputed November claims by German environmental group DUH that its popular Espace model released NOx emissions 25 times over legal limits during a Swiss study.

But French Green deputy Denis Baupin, a member of the technical committee overseeing the investigation, said on Friday it was still “too early to say” whether Renault had committed any fraud by claiming compliance with pollution rules.

“With Renault at risk of being the next (manufacturer) to face an emissions scandal, investors may remain understandably nervous” about the sector, Exane BNP Paribas analyst Stuart Pearson said. “The industry is not yet out of the woods.”

Renault’s share plunge also appeared to delay a planned reduction of the government’s stake in the carmaker, as Macron said the stake sale would now wait until the price improved.

“Our intention is not to sell these shares at a loss to the taxpayer,” the economy minister told reporters.

Macron had pledged to cut the holding back to its longstanding 15 percent level after raising it to 19.7 percent last April in order to secure double voting rights in a vote at the company’s 2015 shareholder meeting.

“We will divest these shares only when they have returned to their normal price,” he said, without elaborating on the required level.

Reporting by Pierre-Henri Allain; Writing by Laurence Frost; Editing by Jason Neely and Mark Potter

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