Volvo unveils proprietary medium-heavy engine

Volvo unveils proprietary medium-heavy engine

At Volvo's Capital Market Day in Eskilstuna, Sweden, on Tuesday, Volvo CEO Leif
Johansson announced that the Group had developed its own medium-heavy engine for
trucks and buses scheduled for launch in 2010. Leif Johansson also said that the
focus of the next few years will be on internal efficiency. Furthermore, he
stated that the sales trend in trucks has continued to weaken in the second
quarter, something that can also be discerned from the truck delivery figures
presented by the Group in the spring. Since the Group is endeavoring to reduce
its inventory of new products, capacity utilization in manufacturing is
generally at very low levels in the plants.

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.

Leif Johansson said that the Volvo Group is developing an in-house, Group-wide
platform for medium-heavy diesel engines. The first of these new medium-heavy
engines will be launched in 2010. In addition, Leif Johansson 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. In the future, the emissions laws from
the various countries will become more harmonized and 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. 

Leif Johansson also spoke of the significance of continuing to develop
additional services and accessories that support products throughout their
entire lifecycles. The trucks and machines in operation require spare parts,
service and maintenance. The Volvo Group possesses a large population of
products in most markets, which is particularly significant in an economic
downturn when sales of new products are low. Sales of, for example, spare parts,
service, financing and other services have also not declined to the same extent
as the sale of new products.

In his presentation, Leif Johansson also commented on market trends: 
“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
leveling out. We are working intently on reducing our stock of trucks and
construction equipment, while striving to defend our price levels. In light of
the weak demand in the market, we have made further reductions to production
compared with the first quarter. We will continue to have low cost coverage
until we have balanced our stocks and costs with demand in the market, and this
will impact profitability,” said 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.

In his presentation, Mikael Bratt, CFO of the Volvo Group, described the
measures being implemented throughout the Group to reduce cost levels and
improve cash flow. He also said that the Volvo Group has high liquidity reserves
despite the sharp economic downturn, and that the company has an advantageous
loan structure with few loans maturing in the next two years. Furthermore, with
its global presence, the Group has excellent opportunities for raising loans on
the capital market.

June 16, 2009

Reporters who want more information, please contact: Mårten Wikforss, AB Volvo,
+46 31 66 11 27 or +46 705 59 11 49

Investor Relations:
Christer Johansson, AB Volvo, tel +46 31 66 13 34
Patrik Stenberg, AB Volvo, tel +46 31 66 13 36
Anders Christensson, AB Volvo, tel +46 31 66 11 91

For further information visit VolvoGroup.com:
http://www.volvo.com/group/global/en-gb/investors/investor_days_presentations/20
09/capitalmarketday.htm

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 100,000 people,
has production facilities in 19 countries and sells their products in more than
180 markets. Annual sales of the Volvo Group amount to about SEK 300 billion.
The Volvo Group is a publicly-held company headquartered in Göteborg, Sweden.
Volvo shares are listed on OMX Nordic Exchange Stockholm. Please visit
www.volvogroup.com for more information or visit www.volvogroup.mobi if you are
using your mobile phone.