The US Court of Appeals for the District of Columbia Circuit has ruled that the Volvo Group should pay penalties and interest of approximately SEK 508 million (US$74.3 million) following a dispute between the Volvo Group and the US Environmental Protection Agency (EPA) regarding NOx emission compliance of diesel engines.
The Court of Appeals affirmed a District Court’s ruling that model year 2005 Volvo Penta engines violated the provisions of a Consent Decree. This is expected to have a negative impact on the Group’s operating income of approximately SEK 440 million (US$64.3 million) in the third quarter of 2014 in the segment Group functions and other.
The Volvo Group had previously accounted for approximately SEK 68 million (US$9.9 million) as a provision and approximately SEK 422 million (US$61.7 million) as a contingent liability.
In 2012 the District Court issued a judgment ordering the Volvo Group to pay penalties and interest for engines which Volvo claims were not part of the decree. Volvo filed an appeal on several grounds. The Court of Appeals’ ruling was rendered on 18 July 2014. Volvo will now review the ruling in detail, and consider whether to appeal or not.