Volvo Group – nine months ended September 30, 2007

· Net sales increased by 13% to SEK 68.4 billion (60.5) in the third
quarter
Adjusted for changes in exchange rates and acquired and divested units,
net sales decreased by 1%
· Operating income rose 54% to SEK 5,010 M (3,260)* in the third
quarter
· Income for the period decreased by 20% to SEK 3,149 M (3,939)* in the
third quarter
· Diluted earnings per share amounted to SEK 1.54 (1.94)* in the third
quarter
· The Industrial Operation’s operating cash flow was negative in an
amount of SEK 0.4 billion (neg. 0.4 billion) in the third quarter



Volvo Group Third quarter First nine months
2007 2006* 2007 2006* Change
Net sales
Volvo Group 68,367 60,479 200,849 191,208 5%
Operating
income Volvo
Group 5,010 3,260 16,457 15,229 8%
Operating
income
Industrial
operations 4,555 2,834 15,186 13,915 9%
Operating
income
Customer
Finance 454 426 1,270 1,314 (3%)
Operating
margin Volvo
Group 7.3 5.4 8.2 8.0 3%
Income after
financial
items 4,571 3,144 15,948 15,073 6%
Income for
the period 3,149 3,939 10,935 12,617 (13%)
Diluted
earnings per
share, SEK 1.54 1.94 5.37 6.21 (14%)
Return on
shareholders'
equity, % 17.3 19.3
* The third quarter of 2006 included a reversal of a valuation reserve
for deferred taxes and an adjustment of goodwill. As an effect,
operating income during the third quarter of 2006 was negatively
affected in an amount of SEK 1,712 M while income taxes decreased by SEK
2,048 M. The total effect on income for the period was positive in an
amount of SEK 336 M.

Aktiebolaget Volvo (publ) 556012-5790
Investor Relations, VHQ
SE-405 08 Göteborg, Sweden
Tel +46 31 66 00 00 Fax +46 31 53 72 96
www.volvo.com

Contacts Investor Relations:
Christer Johansson +46 31 66 13 34
Patrik Stenberg +46 31 66 13 36
John Hartwell +1 212 418 7432



CEO’s comments – strong development in Europe and Asia
During the third quarter, we experienced continued split development in our markets. Demand remained strong for the Volvo Group’s products and services in most of our markets in Europe, Asia and South America, while demand continued to be weak in North America.

A global Group with good geographic balance
Sales in Asia increased through the contributions from the acquired companies Nissan Diesel, Lingong and Ingersoll Rand’s road development operations, combined with increased demand in most markets. Asia has developed into our second largest market. We currently have a significantly better balance in our geographic presence than previously. More than 40 percent of our sales were generated in markets outside Western Europe and North America, which have traditionally been our home markets. Our operations are now based on a strong global foundation, where growth in Eastern Europe and Asia are offsetting the much weaker trend in North America.

Third quarter sales were slightly more than SEK 68 billion, a 13% increase compared with the preceding year, while operating profit of SEK 5,010 M was in line with underlying earnings during the third quarter last year.

Investments in Europe
Demand is currently very strong in Europe. In many areas of the Group, production has reached peak capacity, resulting in a shortage of components, substantial overtime for our employees and increased production costs. During 2008 and 2009 we will successively invest in increased production capacity and we expect that our suppliers will do what is required to ensure their ability to increase deliveries. Investments are being made primarily in Europe since this industrial system supplies large portions of the world with products. In pace with these investments being realized, we can improve productivity and meet the increased demand. It is of strategic importance to be involved and build solid relations with customers in the rapidly expanding markets in Eastern Europe and Asia. Parallel with investments in our industrial systems, we are also rapidly expanding our dealer and service networks to be able to provide efficient service to the growing number of customers who are investing in our products. With a dealer and service network in place, we will also benefit from a growing aftermarket business.

In North America, the truck market remained weak, while at the same time demand for the Group’s other products was subdued. Within the North American truck operations, many people have been working hard to resolve the interruptions we experienced in manufacturing following the production changeovers earlier this year. We now see that production is flowing increasingly more smoothly. In North America, a previous agreement between Mack Trucks and the United Auto Workers (UAW) union expired on October 1. The contract has been extended until October 31, with negotiations currently ongoing with the UAW.

Continued increased profitability in Customer Finance but operating loss for Buses
Construction equipment has a strong product portfolio and is continuing to grow at a rapid pace. Sales rose 37% during the quarter. Profitability did not quite keep pace, but was negatively impacted by a labor conflict in South Korea and cost increases resulting from a production rate exceeding peak capacity.

Buses reported a loss during the third quarter. A reduction in deliveries resulting from production disruptions related to the introduction of EU4 engines and increased losses in Mexico adversely affected earnings. Buses has been experiencing problems for some time and strong measures will be required to reverse that trend and return profitability to satisfactory levels.

Volvo Penta reported an operating margin of 9.6%, slightly lower than the preceding year. Volvo Penta’s marine engines continued to capture market share in a market that has weakened slightly. The market for industrial engines is strong, and Volvo Penta has advanced its positions with a renewed product range.

Volvo Aero experienced a breakthrough with its lightweight technology for aircraft engine components and increased operating margins thanks to continued strong profitability for components and an improved aftermarket business.

Combined with our expanded offering of services, accessories and spare parts, customer financing operations at Volvo Financial Services are an important component in our efforts to intensify cooperation with customers. Volvo Financial Services continues to develop well, with favorable growth and profitability.

Moving toward 2008, we are preparing ourselves for continued strong demand in Europe, with a truck market that is projected to increase by 5-10%. In North America, we expect that the demand for trucks will pick up gradually during 2008.

Leif Johansson
President and CEO



The character of the information is such that it shall be disclosed by AB Volvo (publ) in accordance with the Swedish Securities and Clearing Operations Act and/or the Swedish Financial Instruments Act. The information was disclosed to the media on October 24, 2007 at 7.30 a.m.

This report contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward looking statements as a result of, among other factors, (i) changes in economic, market and competitive conditions, (ii) success of business and operating initiatives, (iii) changes in the regulatory environment and other government actions, (iv) fluctuations in exchange rates and (v) business risk management.

This report does not imply that the company has undertaken to revise these forward-looking statements, beyond what is required under the company’s registration contract with the Stockholm Stock Exchange if and when circumstances arise that will lead to changes compared to the date when these statements were provided.