Volvo and ArvinMeritor plan strategic alliance on axles

Volvo plans to enter into a Strategic Alliance on axles with
ArvinMeritor. A Memorandum of Understanding has been signed between the
two companies. Final agreements are planned to be made during first
quarter 2004.

Axles are a high volume component for specialized companies. The Volvo
group would take advantage of ArvinMeritor's expertise and leading
volume base. In the future ArvinMeritor would be responsible for the
manufacturing and supply of driven and non-driven axles for the Volvo
Group's European truck and bus products.

"Following the acquisition of Renault VI and Mack Trucks in early 2001,
immediate efforts have been made to capture identified synergies and
cost saving opportunities. In this respect new consolidated product
plans for engines, transmissions and axles have been decided and are
currently under implementation", says Lars-Goran Moberg, President and
CEO of Volvo Powertrain. "In 1998 Volvo Trucks outsourced driven axles
and divested its axle operations in Lindesberg, Sweden, to ArvinMeritor.
The Strategic Alliance would be a logic extension of an already
successful business model. It would both free resources and result in
substantial cost savings".

The Volvo Group's axle plant in St Priest and its foundry in Venissieux,
which has specialized on axle housings, would be structured into two
joint ventures. ArvinMeritor would acquire the majority ownership in
these joint ventures.
The manufacturing of non-driven axles at Volvos transmission plant in
Koping would be outsourced to ArvinMeritor, who also would acquire all
related assets. This would enable Koping to concentrate on its core
business becoming a Volvo Group Global Supplier of Transmissions.
The finalization of the Strategic Alliance is conditioned to approval
from concerned competition authorities and fulfilled
negotiations/consultations with involved union representatives.

ArvinMeritor, Inc. is a premier $7-billion global supplier of a broad
range of integrated systems, modules and components to the motor vehicle
industry.

October 27, 2003

For further information, please contact:
Media Relations: Marten Wikforss, +46 31 66 11 27, +46 705 59 11 49
Volvo Powertrain: Jorgen Gustafsson, +46 31 322 28 49, +46 739 022 849
Renault V.I.: Bernard Lancelot, +33 664 404047