Volvo Trucks Braces for $778 Million Hit on Emission Fix

January 04, 2019 at 12:09 AM

AB Volvo is setting aside 7 billion kronor ($778 million) to cover the potential costs of fixing a flaw that allows some of its trucks to emit too much nitrogen oxide.

The company says it will take the charge in the fourth quarter of 2018. The negative impact on cash flow will begin this year and “ramp up in the coming years,” according to the truckmaker.

Volvo warned in October that an emission control component in certain diesels sold worldwide can deteriorate prematurely and allow NOx levels to exceed market standards, especially in Europe and the U.S. The company noted that the flaw is not a safety issue that emphasizes that the affected trucks do meet regulatory standards initially.

Volvo arrived at the estimated cost to remedy the problem by considering testing, analysis and achieving agreement with regulators on an effective repair. But it said in October that the degradation doesn’t affect all engines and vehicles in the same way.