Volvo to Invest More than $240 Million in Capacity Expansion

Powertrain initiative will increase Skovde foundry's capacity 20%

June 15, 2007 — Directors of Swedish truck and heavy equipment builder AB Volvo have approved a capital investment program totaling more than est. $240 million (SEK 1.7 billion) in the Volvo Powertrain business unit, to increase manufacturing capacity for heavy diesel engines by 20%, and increase capacity for heavy gearboxes by 50%.

Volvo cites increasing demand for its trucks, buses, and construction equipment in Eastern Europe and Asia, resulting in greater demand for heavy diesel engines and heavy gearboxes.

The plan to increase output of diesel engines and heavy gearboxes is set to be implemented through 2009.

Specifically, Volvo reports its foundry and production plant in Skovde, Sweden, where it manufactures heavy diesel engines, will be increased by 20%. This accounts for a large part of the total investment, more than an estimated $156 million (SEK 1.1 billion), and involving new machinery, facility expansion, and environmental controls.

In Koping, Sweden where gearboxes are produced, the investment will amount to an estimated $56.7 million (SEK 400 million), to increase production capacity. Other, minor investments will be made in several other Volvo Powertrain plants in other parts of the world "to ensure that industrial systems are adjusted to the higher production capacity," the group stated.

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