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Volvo to Introduce Proprietary Medium-Duty Engine in 2010

The Volvo Group is developing its own medium-duty (MD) engine for trucks and buses. The first of these new medium-duty engines will be launched in 2010, according to Volvo CEO Leif Johansson in his presentation at Volvo’s Capital Market Day in Eskilstuna, Sweden.

Johansson also said that the Volvo Group’s investments in research and technology will remain at high levels in the next few years since new emissions legislation will be introduced for trucks, buses and construction equipment.

Volvo will use EGR, SCR and DPF technology in its global heavy duty engine platform. Click to enlarge.

In the future, the emissions laws from the various major markets—e.g., EPA 2010; EPA Tier 4i (offroad); Euro 6; Japan PNLT (Post New Long-term)—will become more harmonized. By having a global technology platform in place, the Volvo Group will be able to generate economies of scale in research and development as well as purchasing and production.

The company is already planning to apply the Volvo Group heavy-duty (HD) engine platform in all HD trucks.

The MD engine project is a result of the Nissan Diesel acquisition (earlier post). MD and heavy-duty engines will be produced on the same line in Ageo, Japan.

In his presentation, Leif Johansson said that after the substantial growth achieved in recent years through both acquisitions and organic growth, the Group has now reached the critical mass necessary to become globally competitive.

The focus of the next few years will be directed more toward enhancing internal efficiency, for example, by taking advantage of synergies. Targeted reduction in capital expenditures (PPE: property, plant and equipment) are 30-50% over the 2010-2012 timeframe.

Volvo, like other vehicle manufacturers has been hammered by the downturn. The market for heavy-duty trucks in Europe and North America has plunged about 60% from its peak in 2006.

Volvo global deliveries in the month of May declined 66% compared with the year-earlier period; European market deliveries were down 73%, and North American deliveries were down 75%. Year-to-date, total Volvo truck deliveries are down 56%.

We have not yet seen any signs of our primary markets in Europe or North America recovering, although we may have started seeing indications of trends levelling out.

—Leif Johansson

In addition, Leif Johansson stated that the Volvo Group had noted a slight upturn in certain countries, such as China, India and Japan, largely due to government stimulus packages.


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