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Volvo AB (VOL)

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Wednesday 18 December, 2002

Volvo AB

Volvo Powertrain invests SEK 375 M in Skövde,

VOLVO POWERTRAIN INVESTS SEK 375 M IN SKÖVDE, SWEDEN

AB Volvo's business unit Volvo Powertrain AB is investing a total of SEK
375 M in its plants in Skövde, Sweden. The investments cover a new line
for casting and modifications of the machining systems for the next-
generation heavy diesel engine.

The investments are the first step in work to align the industrial
system for the next-generation heavy diesel engine. As a result of the
initial investments of SEK 375 M, capacity in the foundry on the new FPC
(Future Process for Casting) line is being doubled to 80,000 cylinder
blocks per year. FPC is Volvo Powertrain's patented casting method,
which won the World Foundry Organization's (WFO) environmental prize for
2002. The FPC method gives the material added strength, favorable
casting properties, good machinability and reduced environmental impact.
The machining investment involves rebuilding and modification of
existing equipment for the new engine program. The capacity is within
the framework of Volvo Powertrain's permit from the environmental court.

Volvo Powertrain AB is a business unit within AB Volvo with
responsibility for development and manufacture of engines, gearboxes,
axles and complete drivelines for heavy commercial vehicles and
applications for the Volvo, Renault and Mack brands. The company is one
of the largest in its industry. Volvo Powertrain has about 8,000
employees and conducts operations in Sweden, France, the US and Brazil.

December 18, 2002

For further information contact Jörgen Gustafsson +46 31 739-022 849

The Volvo Group is one of the world's leading manufacturers of trucks,
buses and construction equipment, drive systems for marine and
industrial applications, aerospace components and services. The Group
also provides complete solutions for financing and service. The Volvo
Group, which employs about 71,000 people, has production facilities in
25 countries and sells their products in more than 185 markets. Annual
sales of the Volvo Group amount to 18 billion euro. The Volvo Group is a
publicly-held company headquarterd in Göteborg, Sweden. Volvo shares are
listed on the stock exchanges in Stockholm, London, Brussels and
Frankfurt and on NASDAQ in the US.
                                                                                                                                                                                                                                                    

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