Truck and bus manufacturer Volvo Group's North American operations have reached a settlement with the California Air Resources Board (CARB), according to a press release.
The settlement addresses CARB's allegations that the descriptions of certain emission controls on model year 2010-2016 engines, installed in Volvo trucks sold in the state of California, were inadequate. Volvo Group's internal review found no evidence of bad faith, and the settlement is explicitly made without any admission of liability.
Volvo Group has agreed to pay a $12.5 million civil penalty, $71 million to CARB's Air Pollution Control Fund, invest $108 million in emission reduction projects in California under a plan to be submitted for CARB approval within one year, and reimburse $5 million of CARB's costs.
The settlement implies that the Group's operating income in the second quarter of 2024 will be negatively impacted by $196.5 million, equivalent to SEK 1.8 billion, which will be excluded from adjusted operating income.
Operating cash flow in the quarter will be negatively impacted by $89 million, equivalent to SEK 0.8 billion. The remaining cash flow impact is expected to occur over the next five years.
As part of the settlement, Volvo will provide software updates and a partial warranty extension for 7,200 model year 2014-2016 engines in California. Volvo is not aware of any further investigations regarding emissions compliance for the company's engines in the U.S.
AB Volvo is the leading European truck maker and No. 3 worldwide. Net sales break down by activity as follows:
- sales of trucks (66.2%): 202,911 vehicles sold in 2025 (names Volvo, Renault, Eicher and Mack);
- sales of construction equipment (16.7%): excavators, loaders, backhoes, hydraulic shovels, graders, dump trucks, etc.;
- financial services (5.4%);
- bus and chassis sales (5.1%): world's No. 2 largest manufacturer;
- sales of parts, control systems, and marine and industrial motors (4.2%): for commerce and cruise ships and for industrial applications (irrigation units, lifting trucks, electrical generators, etc.);
- other (2.4%).
Net sales are distributed geographically as follows: Europe (43.1%), North America (29.3%), Asia (11.5%), South America (9.7%), and Africa & Oceania (6.4%).
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