Volvo Group agrees to $197 million settlement with California over excess truck emissions
Volvo Group Settlement Details and Implications
Background of the Settlement
HELSINKI/WASHINGTON, May 18 (Reuters) - Truckmaker Volvo Group on Monday agreed to a $197 million settlement with the California Air Resources Board over alleged violations of the state's heavy-duty engine regulations.
The settlement resolves allegations that Volvo failed to properly disclose auxiliary emission control devices in over 10,000 of its 2010-2016 model year heavy-duty engines in California that resulted in emissions in excess of regulatory limits, CARB said.
Financial Breakdown of the Settlement
Penalties and Payments
Volvo will pay $13 million in civil penalties, $71 million to CARB’s Air Pollution Control Fund, spend $108 million on California emissions‑reduction projects and reimburse $5 million of CARB’s costs, the truckmaker said.
Additional Settlement Provisions
- As part of the settlement, Volvo will make software updates and a partial warranty extension available for about 7,200 engines in California.
Statements from CARB and Volvo
CARB's Perspective
- CARB said Volvo acted transparently and in good faith in explaining and improving emissions control devices and fully cooperated with the state investigation.
Volvo's Response
- Volvo said the settlement is without admission of liability and that an internal review found no evidence of bad faith.
Financial Impact on Volvo Group
Accounting and Cash Flow Effects
- The company said it would take a $197 million charge to its second-quarter operating results that will be excluded from adjusted operating income and that the operating cash-flow impact in the ongoing quarter would be $89 million, with the remaining cash outflows spread over the next five years.
Upcoming Financial Reporting
- The Volvo Group will report its second-quarter results on July 17.
Reporting Credits
(Reporting by Essi Lehto and David Shepardson, editing by Tomasz Janowski)
