Volvo Group has set aside £615.8 million to cover costs to address a faulty emissions control component which the degradation of could cause engines to exceed NOx emissions limits.
The company, which manufactures trucks, buses and construction equipment, as well as marine and industrial engines, first reported its concern over the “degrading emission control component issue” in October last year.
The engines in question are equipped with selective catalytic reduction (SCR) aftertreatment systems that were designed initially to meet EPA 2010 emissions standards.
A Volvo statement said: “The estimated costs are based on several factors such as testing of vehicles, statistical analysis and dialogue with relevant authorities.
“The next step will be to define how to implement corrective actions concerning the component in vehicles affected by this issue. This will be done together with the relevant authorities.
“The degradation of the component in question does not pose a product safety issue, nor does it negatively affect vehicle or engine performance in areas other than emissions control.
“The degradation is a result of a materials issue that occurs over time. All engines and vehicles equipped with the component meet emissions limits at delivery.”
Volvo Group said the money set aside will impact operating include in the fourth quarter of 2018, and a negative cash flow effect will start in 2019 and gradually ramp up in the coming years.