Volvo Group Agrees to $197M Settlement With California Over Excess Truck Emissions

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.

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.

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As part of the settlement, Volvo will make software updates and a partial warranty extension available for about 7,200 engines in California.

CARB said Volvo acted transparently and in good faith in explaining and improving emissions control devices and fully cooperated with the state investigation.

Volvo said the settlement is without admission of liability and that an internal review found no evidence of bad faith.

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.

The Volvo Group will report its second-quarter results on July 17.

(Reporting by Lehto and Shepardson; editing by Tomasz Janowski)