AB Volvo’s Board of Directors has decided to invest slightly more than SEK 1.7 billion (£ 122m) in Volvo Powertrain.

This substantial investment will result in manufacturing capacity for heavy diesel engines increasing by 20 per cent and heavy gearboxes increasing by 50 per cent.

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.

It is to meet this demand that Volvo’s Board of Directors has decided to invest in the Group’s manufacturing capacity through to 2009.

A large part of the investment, slightly more than SEK 1.1 billion, will be in the foundry and production plant in Skövde, where production capacity for heavy diesel engines will be increased by 20 per cent. The investment there will comprise machinery, premises and environment-enhancing measures.

In Köping, where gearboxes are produced, the investment will amount to SEK 400 million. In addition, minor investments will be made in a number of Volvo Powertrain’s plants in other parts of the world, to ensure that industrial systems are adjusted to the higher production capacity.

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AB Volvo will invest more than SEK 1.7 billion (£ 122m) by increasing manufacturing capacity for heavy diesel engines and gearboxes by up 50 per cent.