Volvo Group orderd by U.S. Court of Appeals to pay penalties in engine emission case

Volvo Group has been ordered by the U.S. Court of Appeals to pay penalities and interest for model year 2005 Volvo Penta engines violating emissions compliance.

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The U.S. 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 following a dispute between the Volvo Group and the U.S. Environmental Protection Agency (EPA) regarding 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 in the third quarter of 2014 in the segment group functions and other.

The Volvo Group had previously accounted for approximately SEK 68 million as a provision and approximately SEK 422 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 July 18, 2014. Volvo will now review the ruling in detail, and consider whether to appeal or not.

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