Volvo establishing industrial base in mexico

TO INVEST USD 150 M: VOLVO ESTABLISHING INDUSTRIAL BASE IN MEXICO - Acquires bus manufacturer Mexicana de Autobuses - Plans to start local assembly of passenger cars - Establishes Group-wide procurement unit - Conducts feasibility study of cab manufacturing for construction equipment - Establishes a finance company Volvo has acquired Mexicana de Autobuses (MASA), a Mexican bus & coach manufacturer. The purchase price amounts to USD 70 M (ca SEK 560 M). Henlys - Volvo's bus partner in North America - will subsequently acquire 35 per cent of Volvo's Mexican bus & coach activities. Sales amounted to 928 buses and coaches during the first six months of 1998 and revenues totaled USD 77 M (in 1997, sales amounted to 807 buses and coaches and revenues totaling USD 59 M). These figures establish MASA as the second largest bus and coach manufacturer in Mexico. At present, production is concentrated to coaches, in which MASA is the Mexican market leader. City buses are manufactured as well. MASA's head office and production plant are situated in Tultitlan in the outskirts of Mexico City. The company has 2,400 employees. The acquisition is part of Volvo's growth strategy in the NAFTA region (Mexico, Canada and the U.S.). MASA's 51,000-square-meter production plant will be integrated in the Volvo Group's production structure in North America. Combined with earlier acquisitions of bus- and coach manufacturers Volvo's total bus- and coach production capacity in NAFTA countries is about 5,000 units per year. "It is a fact that the NAFTA-region represents 26 per cent of the world's total economy and provides substantial opportunities for increased trade between Mexico, the U.S. and Canada. We have maintained a strong industrial base in North America for many years. In order to support our growth-strategy, we are now strengthening that base through comprehensive investments in Mexico," says Leif Johansson, President and CEO of Volvo. Volvo Car Corporation In addition to the acquisition of MASA, Volvo plans to establish assembly operations for its S70/V70 car models within MASA's premises. Based upon an ongoing market study, Volvo Cars will also establish a dealer network as well as a training center. This will enable the company to supply service and sell initial volumes of 1,000 units, starting first quarter 1999 . Volvo Construction Equipment and Volvo Penta Volvo Construction Equipment is conducting a feasibility study concerning the set-up of cab manufacturing in Mexico. The cabs will be destined for Volvo Construction Equipment's plant in Asheville, North Carolina, USA. The study is expected to be finalised shortly. The potential for Volvo Penta to conduct sales of industrial engines is also being studied. Volvo Trucks and Volvo Aero Volvo Trucks began production operations in Mexico in 1994 through an agreement with the General Motors factory in Toluca. Approximately 350 trucks were produced at the plant in 1997. Volvo Aero has already established its market presence in Mexico through AGES Group, a subsidiary that conducts trading and leasing operations in aircraft materials. Other Volvo Group activities Volvo also plans to build up a central procurement entity to manage purchases part- and component purchasing for the Volvo Group. A structure will be developed to supply components for Volvo's global industrial need. In 1998, a finance company will be created as well. The Volvo Group has a broad international base Volvo is an international transport vehicle group with more than 70,000 employees, production in 30 countries and a global marketing and service organisation. Markets outside Sweden account for about 90 per cent of sales. The Group manufactures passenger cars, trucks, buses, construction equipment, powertrain systems for marine and industrial applications and aircraft engines. Sales of the Volvo Group for the fiscal year 1997, amounted to 25 billion USD. Operating income amounted to 1 billion USD. October 1, 1998