Volvo AB (VLVLY) said its North American unit has reached a settlement with the California Air Resources Board and has agreed to pay about $197 million over alleged violations of emissions and certification requirements related to certain engines sold in California.
The company said the settlement resolves CARB's concerns regarding the adequacy of emissions-control descriptions on about 10,000 Volvo Group model year 2010 through 2016 diesel engines used in heavy-duty trucks across California. Volvo added that its internal review found no evidence of bad faith conduct and that the agreement does not include any admission of liability.
Under the settlement, Volvo has agreed to pay $12.5 million in civil penalties, contribute $71 million to CARB's Air Pollution Control Fund, spend $108 million on California emissions-reduction projects, and reimburse $5 million of CARB costs.
As a result, Volvo expects to record a negative impact of $196.5 million in operating income for the second quarter of 2026.
The company also said second-quarter operating cash flow will be negatively affected by $89 million, with the remaining cash impact expected to occur over the next five years.
As part of the settlement, the company said it will provide software updates and a partial warranty extension for around 7,200 model year 2014-2016 engines in California.
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May 15, 2026 15:25 ET Apart from the confirmation of Kevin Warsh as the next Fed chair, the main news on the economics front this week included key price data from the U.S. and the first quarter economic growth figures from major economies. Both consumer prices and producer costs have started to reflect the effect of supply shocks due to the Middle East conflict. In Europe, GDP data was in focus, while inflation data from China dominated the news flow in Asia.