Volvo is investing SEK 1.4 billion to develop a new 16-liter diesel engine. This is the first step in the consolidation of Volvo’s engine program following the acquisition of Renault VI/Mack.
Development of engines is moving toward reduced emissions and higher demands on fuel economy, which places heavy demands on engine manufacturers. This in turn requires the largest production and purchasing volumes possible over which to distribute costs.
The Volvo Group’s consolidated engine program will account for a substantial portion of the long-term synergy effects of the Renault VI/Mack deal. Total synergies are calculated at SEK 3.5 billion annually from and including 2003.
“The acquisition of Renault VI and Mack provides us the necessary volume and base of expertise to develop a proprietary 16-liter diesel engine and manufacture it in-house,” says Volvo CEO Leif Johansson. “With new technology, the new engine will meet all currently known emission legislation.”
With output from 500 horsepower and above, the new 16-liter engine will be offered to Volvo’s business areas for trucks, buses, construction equipment and marine and industrial engines. The engines is well-suited for mainly heavy transports. for example, timber carriers and for Volvo Construction Equipment’s heavy machinery.
Volvo Penta is expected to account for about half of the total sales of 16-liter engines. Volvo Penta will deliver the engines mainly for industrial applications, such as generators and industrial pumps.
The engine is a key element in Volvo Penta’s strategy to sharply increase sales of industrial engines in the years immediately ahead. Moreover. Volvo Penta is not ruling out the possibility long term of also developing a marine version of the 16-liter engine, which would result in additional volumes for Volvo’s engine production.
The new 16-liter engine will be developed and manufactured by Volvo Powertrain, the unit within Volvo responsible for supplying diesel engines. gearboxes, rear axles and driveline systems to all of Volvo’s business areas. The development team will comprise engineers from the development departments in Sweden, France and the US.
As a result of the acquisition of Renault VI/Mack, the Volvo Group doubled its total volume of diesel engines to about 200,000 units annually, making Volvo the world’s fourth largest manufacturer of heavy diesel engines.
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