Stokholm — Sweden’s Volvo said on Tuesday that an
emissions control component used in its vehicles was degrading more
quickly than expected, which could cause engines to exceed emission
limits for nitrogen oxides, sending its stock down sharply.
The company,
which makes trucks, construction equipment and buses,
said the largest volume of potentially affected engines had been sold in
North America and Europe, its two largest markets, and that costs to
fix the problem “could be material”.
The issue could become an added headache for Volvo, which has been
working hard to protect profitability after a surge in demand in Europe
and North America caused suppl- chain bottlenecks, inflating costs for
raw materials and labour.
Volvo’s shares were down 6% at 133.60 Swedish krona at 7.22am GMT,
making it easily the biggest faller on Stockholm’s blue chip index.
Volvo, which sold 143,373 trucks in Europe and North America last
year, said it was in the process of informing authorities. A
spokesperson said Volvo had spoken to authorities in the two regions,
where emission regulations are strictest, but that there were no plans
yet to recall any vehicles.
Several countries have, in recent years, set ambitious goals to cut
carbon dioxide and nitrogen oxide emissions, bringing car makers and
truck makers under greater scrutiny.
“We expect remedy to be recall and repair,” Evercore analysts wrote in a client note.
The car industry was rocked by the 2015 “dieselgate” emissions
scandal after Germany’s Volkswagen (VW) was forced to pay hefty fines
after admitting to systematic emissions cheating. VW, which has pegged
the financial toll at more than $18bn, is still dealing with the fallout
of the scandal. There was no indication on Tuesday that Volvo had
cheated or hidden any emissions-related information from authorities.
Volvo said all products equipped with the component met emissions
limits at delivery and that its probe so far indicated that the
degradation did not affect all vehicles and engines in the same way or
to the same extent.
Volvo is due to report third-quarter results on Friday.
- Reuters
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