Volvo has set aside 7bn Swedish krona (£616m) to fix issues with some of its engines amid concerns they could exceed emissions limits, the company has said.
The Swedish car manufacturer last night said the costs relate to the 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,” the company said in a statement.
In October the company admitted an emissions control component in some of its engines was degrading more quickly than expected, meaning they could be exceeding nitrogen oxide limits.
It said all engines and vehicles with the component installed met emissions standards at the time of delivery, and that the fault does not impact engine performance.
Volvo said the costs of fixing the issue will affect operating income in the fourth quarter of 2018, while the negative cash flow effect will begin in 2019 and “gradually ramp up” in the coming years.
“The Volvo Group will continuously assess the size of the provision as the matter develops,” it added.
The automotive industry has been hit by tough new emissions standards following revelations that Volkswagen cheated emissions tests.
In October German authorities handed down an €800m (£702m) fine to Audi for breaking emissions rules for their diesel engines.