Volvo to Increase Engine, Gearbox Production Capacity

15 Jun 2007 • by Natalie Aster

Volvo AB, the world's second-largest truckmaker, will invest more than $240 million to expand engine and gearbox production as sales boom in eastern Europe and Asia, reported The Bloomberg.

Gothenburg, Sweden-based Volvo will invest ``slightly more'' than 1.1 billion kronor ($160 million) at its Skoevde heavy diesel facility in southern Sweden, and about 400 million kronor at the Koeping gearbox site, Volvo said today. In total, Volvo will invest just over 1.7 billion kronor, it said.

``As a result of increased demand for the Volvo Group's products in emerging markets such as Eastern Europe and Asia, production requirements for heavy diesel engines and heavy gearboxes are also rising,'' Volvo said in a statement.

The additional investment will let Volvo increase diesel- engine capacity by 20 percent and heavy-gearbox production by 50 percent by the end of 2009. Volvo is also spending 935 million kronor to build a Russian assembly plant. The truckmaker last month forecast that the eastern European truck market will double by the end of 2010 as the region's economy expands.

Competitors Scania AB, MAN AG and Paccar Inc.'s DAF Trucks unit are also increasing capacity as demand outweighs production. DAF plans to lift production at the main Dutch plant this year. Scania, Sweden's second-largest truckmaker, intends to boost production 54 percent to 100,000 trucks and buses a year by 2010. MAN will open a Polish plant later this year.