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Thursday 04 April, 2002

Volvo AB

Re Agreement

Volvo AB
3 April 2002

                                      VOLVO
                              Construction Equipment

Press Information

VOLVO TO PRODUCE CABS FOR KOMATSU 

First Step in Cooperation on Construction Equipment Components


Komatsu Ltd. and Volvo Construction Equipment (Volvo CE) have now reached a
basic agreement for cooperation on production and development of construction
equipment components as a result of discussions both companies have engaged in
since last autumn.

As a first step, Komatsu and Volvo have signed a letter of intent for the
production of Komatsu designed wheel loader cabs at Volvo CE'S cab plant in
Hallsberg, Sweden. The cabs, currently outsourced, will be for four models of
Komatsu's small wheel loaders, produced in Europe and North America.

Production is scheduled to start at the beginning of 2003 after the finalization
of specific conditions. The volume will be set for approximately 1,500 units per
year.

With the outsourcing of production to Volvo CE, Komatsu will be able to expect a
reduction in costs. This commercially based agreement will provide Volvo CE with
increased operating efficiencies at its Hallsberg plant.

The agreement is part of the ongoing cooperation discussions between Komatsu and
Volvo CE. Discussions in progress include collaboration in the supply and
development of drivelines, except engines. Conclusion of these discussions is
expected to take place this autumn and announcements on these and other
potential ventures will be made as basic agreements are reached.

Mr. Masahiro Sakane, President of Komatsu, and Mr. Tony Helsham, President & CEO
of Volvo CE, state: 'The cab venture is an initial step in our commitment to
reinforce cost competitiveness, further improve quality & technology and
increase customer satisfaction. It shows how a 'win-win' situation can be
achieved.'

Discussions between Komatsu and Volvo CE regarding cooperation in the production
and development of construction equipment components was first announced in
November 2001. In the discussions, Volvo CE and Komatsu will not include
cooperation in sales, service, distribution and equity participation. Both
companies will continue to engage in business as independent competitors using
their own dealer networks, brands and product identities.

For further information, please contact:
Klas Magnusson, Senior Vice President Corporate Communications
Volvo Construction Equipment
Tel: +32 2 482 5065, Mobile: +32 475 576214

April 3, 2002

Volvo Construction Equipment is a major international company developing,
manufacturing and marketing equipment for construction and related industries.
Its products, leaders in many world markets, include a comprehensive range of
wheel loaders, hydraulic excavators, articulated haulers, motor graders and
compact equipment. Volvo Construction Equipment is part of the Volvo Group,
world-leading manufacturer of trucks, buses, construction equipment, marine and
industrial engines, and aerospace systems and components.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
                                                                                                                                                               

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