Truck maker AB Volvo’s board has given the green light to a SEK 1.7bn (GBP122m) investment in Volvo Powertrain to boost capacity for heavy diesel engines by 20% and heavy gearboxes by 50%.


The output boost is in response to increased demand for Volvo group products in emerging markets such as eastern Europe and Asia, though worldwide production requirements for heavy diesel engines and heavy gearboxes are also rising, the automaker said.


The investment is expected to meet manufacturing capacity requirements through to 2009.


A large part of the investment, just over SEK1.1bn, will be in the foundry and production plant in Skövde, where production capacity for heavy diesel engines will be increased by 20%. The investment there will comprise machinery, premises and environment-enhancing measures.


In Köping, where gearboxes are produced, the investment will total SEK400m. In addition, minor investments will be made in a number of Volvo Powertrain plants in other parts of the world, to ensure that industrial systems are adjusted to the higher production capacity.