Volvo Aero to sell its US service business

Volvo Aero to sell its US service business

Volvo Aero has signed an agreement to sell its US subsidiary Volvo Aero
Services. The sale is expected to have a negative impact of
approximately SEK 200 M on the Volvo Group's operating income during the
second quarter. At the same time, the transaction is expected to have a
positive effect of about SEK 400 M on the Group's net financial debt in
the third quarter.

The sale of Volvo Aero Services is due to Volvo Aero's strategy of
focusing on its core operations of developing and manufacturing
components for aircraft engines, combined with the goal of reducing the
company's tied-up capital.

“This decision is in line with our strategy to grow as a component
manufacturer in the aerospace industry,” says Volvo Aero's President,
Staffan Zackrisson. “Over time, we have seen that the synergies between
our operations and those conducted by Volvo Aero Services are minimal.”

The operations pertaining to maintenance of engines and gas turbines
currently carried out in Trollhättan will not be impacted by the
transaction.

The sale is expected to have a negative impact of approximately SEK 200
M on the Volvo Group's operating income during the second quarter. The
sale is among other things contingent on customary approvals being
obtained and completion is expected to take place in the third quarter
of 2010, at which point it is forecast to have a positive effect of
about SEK 400 M on the Group's net financial debt.

Volvo Aero Services' sales during 2009 amounted to SEK 1.4 bn. The
divestiture will impact a total of 160 employees at Volvo Aero Services
in North America.

July 12, 2010

Journalists who want further information, please contact Volvo Aero's
Director Corporate Communications, Fredrik Fryklund, at +46 (0)520-94
401 or +46 (0)703-19 23 96.