Renault set a gloomy tone for the European car industry by slashing its outlook for revenue and profit, saying weakening economies are weighing on car sales and tougher rules on emissions have increased costs.

Renault’s Dacia has built a devoted following for its often spartan, low-cost vehicles, making it one of the French manufacturer’s fastest-growing consumer brands.

European car registrations fell sharply in June, resuming a downward spiral this year that has seen profit warnings at German manufacturer Daimler and a quarterly division loss at rival BMW.

Carmakers failing to cut greenhouse gas emissions risk writing a big cheque to the EU.