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French carmaker PSA sees shares drop on diesel fraud report

Posted September 8

— Shares in French carmaker PSA Group fell sharply Friday after a report said as many as 1.9 million Peugeot and Citroen cars may have engines designed to trick diesel emissions tests.

In a report, the Le Monde newspaper said the company could face fines of up to 5 billion euros ($6 billion) for allegedly using special devices that programmed engines to vary their emissions levels when being tested.

The report prompted a reverse in the company's share price, which was trading down 4 percent at 17.86 euros in Paris.

PSA denied wrongdoing and threatened to file a complaint over the report, citing extensively from a document from French consumer fraud agency DGCCRF, which has been investigating several car brands sold in France since Volkswagen was found in 2015 to have cheated on U.S. emissions tests.

PSA said in a statement that it complies with all regulations and "its vehicles have never been equipped with software or systems" allowing it to deceive tests.

According to Le Monde, PSA developed a strategy to equip its engines with so-called defeat devices that would reduce the level of nitrogen oxide emissions during testing, and allow them to rise when cars are on the road.

The report said 1.9 million Peugeot and Citroen cars made between 2009 and 2015 were affected — and that the company sought to continue the strategy in newer-generation cars made after 2015 but with the defeat devices less noticeable.

PSA said it had not been contacted by judicial authorities and that it was "outraged" to see information about the investigation leaked to outsiders while the company hasn't seen the document in question.

It is now up to investigating judges with the public health arm of the Paris prosecutor's office to determine whether to send the company to trial, along with other carmakers being scrutinized.

The prosecutor's office and DGCCRF refused to comment on Friday's report, citing the rules on secrecy of ongoing investigations.

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