Volvo Group has made a provision of SEK 7bn (over GBP600m) relating to estimated costs to address a degrading emission control component issue. The company said last year that its truck and bus engines could be exceeding limits for Nitrogen Oxide (NOx) emissions.

Volvo Group said it has detected that an emissions control component used in certain markets and models may degrade more quickly than expected, affecting the vehicles emission performance negatively. The Volvo Group will in the fourth quarter 2018 make a provision of SEK 7 bn, relating to the estimated costs to address the issue.

The company 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 company said.

Volvo stressed that 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.

The provision will impact operating income in the fourth quarter of 2018, while the negative cash flow effect will start in 2019 and gradually ramp up in the coming years.