Volvo Investing in a New Production Facility

The Volvo Group is investing in an assembly facility for trucks in Russia to meet increasing demand on the fast-growing markets there and in the former countries in the Soviet Union. The new facility will have a capacity of 10,000 Volvo trucks and 5,000 Renault trucks per year.

The facility will be located in the city of Kaluga, approximately 200 kilometers southwest of Moscow. A final agreement with the authorities in Kaluga is expected to be signed in the near future and the new facility is scheduled to be completed in 2009.

Sales on the Russian market of new western trucks have increased by nearly 100% annually during the past two years and the Volvo Group's sales on the Russian market have had a similar development. Since 2003, sales of new Volvo trucks have grown from slightly less than 500 vehicles to 2,500 last year. Renault Trucks, which became established on the Russian market in 2004, has also increased its sales and sold 600 trucks last year.

In addition, the demand for used trucks from Western Europe has been strong in Russia (about 5,000 used Volvo trucks were imported in 2006), but Russia customers are now increasingly choosing to purchase new vehicles. Continued increased demand for new vehicles from Western Europe is expected in the years immediately ahead.

Since 2003, the Volvo Trucks has operated a smaller assembly plant in Zelenograd just outside Moscow. The facility has a capacity of about 500 vehicles a year and is today working at full capacity.

Since becoming established in Russia in 2004, Renault Trucks has built a service network at a rapid pace and currently has 17 service centers in the country.

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