Mack and UAW reach tentative agreement including creation of independent retiree healthcare trust

Mack and UAW reach tentative agreement including creation of independent retiree
healthcare trust

Mack Trucks, Inc. and the United Auto Workers union have reached a tentative
agreement on a new 40-month Master Agreement. The agreement includes the
creation of a trust that would completely eliminate Mack´s health care
liabilities for retirees. If approved by the UAW members, the agreement would
have a negative impact on the Volvo Group´s operating income of approximately
$110 million in the second quarter 2009.

The tentative agreement includes a successor collective bargaining agreement,
and the creation of a UAW-managed independent trust, known as a Voluntary
Employee Beneficiary Association (VEBA). The VEBA would permanently assume the
sole obligation of providing retiree health benefits to current and future Mack
retirees, spouses, surviving spouses, and their dependents. The successor
collective bargaining agreement and the VEBA are conditional on ratification by
the UAW membership. Thereafter, the VEBA will be subject to an Approval Order
from the U.S. District Court for the Eastern District of Pennsylvania, which
could take up to 12 months.
Mack's parent company, Sweden-based AB Volvo, has agreed to fund the VEBA with
$525 million in cash, which would be paid in equal installments over a five-year
period. The first payment would be made no earlier than July 1, 2010. If the
agreement is ratified by the UAW membership, the Volvo Group will have a
negative impact on operating income of approximately $110 million in the second
quarter 2009, and a negative impact on the Volvo Group's net debt of an equal
amount.
The establishment of the VEBA would allow for continued health care benefits for
current Mack-UAW retirees, surviving spouses and dependents (about 9,000 people
in total), as well as for future UAW retirees, while eliminating Mack's health
care liabilities for this group.
Further comment about the proposed Master Agreement is being withheld pending
ratification by the various local bargaining units. The ratification meetings
are being scheduled by the UAW, and will be held within the next few weeks.

May 18, 2009
Reporters who want more information, please contact:
Mårten Wikforss, AB Volvo, tel +46 31 66 11 27 or +46 705 59 11 49

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AB Volvo (publ) may be required to disclose the information provided herein
pursuant to the Securities Markets Act. The information was submitted for
publication at 08.30 a.m. CET, 18 May, 2009.

The Volvo Group is one of the world's leading manufacturers of trucks, buses and
construction equipment, drive systems for marine and industrial applications,
aerospace components and services. The Group also provides complete solutions
for financing and service. The Volvo Group, which employs about 100,000 people,
has production facilities in 19 countries and sells their products in more than
180 markets. Annual sales of the Volvo Group amount to about SEK 300 billion.
The Volvo Group is a publicly-held company headquartered in Göteborg, Sweden.
Volvo shares are listed on OMX Nordic Exchange Stockholm. Please visit
www.volvogroup.com for more information or visit www.volvogroup.mobi if you are
using your mobile phone.