Volvo discovers faulty emissions component; shares tumble
Volvo Class B
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16:46 23/04/24
Shares in Volvo Group have crashed after it warned of possibly “material” costs following the discovery that some engines could be exceeding emissions limits.
Sweden’s Volvo said it had discovered that an emissions control component was “degrading more quickly than expected, which could cause the engines to exceed emissions limits for nitrogen oxides.
“All products equipped with the component meet emissions limits at delivery; the degradation is due to a materials issue that occurs over time. A full analysis of the issue is not completed and it is not possible to assess the financial impact at this stage. However, the cost could be material.”
The largest volume of potentially affected engines was sold in North America and Europe.
Shares in the trucks and buses specialist – which is entirely separate to the Chinese business that owns the Volvo car brand – had lost more than 5% at 134.95 Swedish kroner by midday BST in Stockholm, after initially losing 9% at the start of the session.
Michael Hewson, chief market analyst at CMC Markets UK, said: “The cost of remedying the problem could be in the millions of kroner, and with no accurate estimate of how many vehicles the problem may affect, the shares have dropped to a one-year low.”
Gothenburg-based Volvo said that the component degradation was not a product safety issue, nor should it negatively affect vehicle or engine performance.