Volvo Group agrees to $197 million settlement with California over excess truck emissions

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.

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.

• 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 Essi Lehto and David Shepardson, editing by Tomasz Janowski)