HELSINKI/WASHINGTON, May 18 - Truckmaker Volvo Group on Monday agreed to a $197 million settlement with the California Air Resources Board (CARB) addressing alleged breaches of California's heavy-duty engine regulations.
CARB's allegations concern the company's disclosure of auxiliary emission control devices in more than 10,000 of Volvo's 2010-2016 model year heavy-duty engines operating in California, claims that those vehicles produced emissions exceeding regulatory limits, and the resulting enforcement action that the parties have now resolved.
Under the terms disclosed by Volvo, the total settlement amount is $197 million, allocated across several components:
- $13 million in civil penalties;
- $71 million payable to CARB's Air Pollution Control Fund;
- $108 million committed to California emissions-reduction projects; and
- $5 million to reimburse CARB's investigative costs.
As remedial measures for affected vehicles, Volvo will provide software updates and offer a partial warranty extension for approximately 7,200 engines registered in California, according to the company.
CARB characterized Volvo's engagement as transparent and cooperative, saying the company acted in good faith in describing and improving the emissions control devices and fully cooperated with the state investigation.
Volvo said the settlement is entered without any admission of liability. The truckmaker also reported that an internal review found no evidence of bad faith in its handling of the matter.
On its financial reporting, Volvo indicated it will take a $197 million charge to its second-quarter operating results. That charge will be excluded from adjusted operating income, the company said. Volvo expects the immediate operating cash-flow impact in the ongoing quarter to be $89 million, with the remaining cash outflows scheduled to be paid over the next five years.
The Volvo Group is scheduled to report its second-quarter results on July 17.
Note: This article reports the details of the settlement and the statements from both CARB and Volvo as presented by the parties. It does not include any additional commentary or external information beyond those disclosures.