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Diesel revelations choke faith in the car industry

The latest emission probes sparked fears VW wasn't the only carmaker cheating tests
April 28, 2016

Signs of recovering demand from China and steady growth in Europe were expected to revitalise depressed sentiment in cyclical car markets. However, overshadowing a recent burst of upbeat first-quarter updates from the world's biggest names was a global probe that's thrown into question the validity of emission test procedures. While improved trading prospects are encouraging, this has now taken a back seat to the realisation that allegations and evidence of cheating regulatory requirements are more than capable of obliterating valuations.

Results from tests introduced following last year's Volkswagen (DE:VOW3) scandal have now emerged showing that some of the biggest selling cars emit much more nitrogen oxide when tested outside of laboratories. Embarrassed governments were quick to respond to worryingly high signs of pollution levels and potential breaches of regulation by launching a series of individual investigations into some of the world's most respected manufacturers.

One of the earliest victims was PSA Peugeot Citroën (FR:UG). Shares in Europe's third-largest carmaker by sales fell 10 per cent after word spread that investigators had raided its offices, only to recover once the French government confirmed that no evidence was found linking it to the practices of its shamed German peer.

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