SKOVDE, Sweden — Volvo’s Powertrain business unit has inked a letter of intent and is negotiating a long-term agreement to supply of 12-litre engines to International.
“This is a very exciting development for business unit Powertrain”, says the Volvo Group’s president and chief executive officer, Leif Johansson. “At a time when our North American truck operations are faced with serious challenges, this opportunity for growth within Volvo Powertrain is most welcome.”
The engines will be used in trucks manufactured by International in NAFTA countries, and will comply with the U.S. ’02 emission regulations. The engines will initially be produced at Volvo Powertrain’s plant in Skovde, Sweden, however, Volvo eventually intends to move production to North America.
“We are very pleased that International has demonstrated confidence in our ability to fulfill the demands for the ever-stricter U.S. emission regulations,” says Lars-Goran Moberg, president of Volvo Powertrain.
As well the business unit has announced plans to invest $1.4 billion (in Swedish currency) to develop a new 16-liter engine. This is the first step in the consolidation of Volvo’s engine program following the acquisition of Renault VI/Mack.
A new engine program accounts for a major share of the long-term synergies in the deal. As a result of the acquisition of Renault VI/Mack, the Volvo Group doubled its total volume of diesel engines to about 200,000 units annually, making Volvo one of the world’s largest manufacturer of heavy diesel engines.
“The acquisition of Renault VI and Mack provides us the necessary volume and base of expertise to develop a proprietary 16-liter diesel engine and manufacture it in-house,” says Johansson. “With new technology, the new engine will meet all currently known emission legislation.”
Volvo says the new engine would be well suited for heavy transports such as Canadian timber haulers, heavy construction equipment, heavy-duty industrial engines or pumps and several for marine applications.
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