AB Volvo targets powertrain self-sufficiency

By: Alan Bunting, Monday, June 22, 2009,

AutomotiveWorld.com

Back in 1998, AB Volvo acquired a 10% stake in the German diesel engine maker Deutz. It was part of a deal which saw Volvo Trucks (as well as AB Volvo’s construction equipment division) becoming wholly dependent on Deutz for mid-range engines in the 3.6 to 7.2 litre category. At the time Volvo judged its own vehicle manufacturing volumes insufficient to justify investing in a major mid-range diesel development programme of its own to replace its ageing 5.5 and 6.7 litre units.

However, barely two years later Volvo gained control of the Renault group’s truck operations, which led to a massive product rationalisation programme. Renault’s own 4.2 and 6.4 litre mid-range engines were unceremoniously ditched, to be replaced by their Volvo group equivalents – sourced from Deutz in Cologne. Many observers commented that the Volvo-Deutz deal would never have been countenanced if the Swedes had known their link-up with Renault, which boosted the group’s requirement for mid-range engines hugely, was on the horizon. The more recent Volvo stake in Nissan Diesel has detracted further from the logic of outsourcing engines.

It was perhaps no great surprise then to hear Volvo group CEO Leif Johansson announce that next year the group would take the first step back to powertrain self-sufficiency with all its vital added-value cost implications. A new wholly in-house developed ‘medium heavy’ diesel for trucks and buses will be introduced during 2010. No further details are being released at this stage. It seems certain however that it will replace the 7.2 litre in-line-six Deutz-built engine which currently powers all Volvo and Renault chassis grossing 12 to 26 tonnes. The wording of the announcement suggests there will also be a four-cylinder derivative to supplant the current 4.8 litre unit from Cologne which goes into the lighter 6 to 10 tonne Renault Midlum truck chassis.

Where the new engines will be manufacturered has not been revealed. But the Volvo group’s engine plant at Venissieux in France, which already assembles the heavier-duty 9 and 11 litre diesels, has ample space and capacity from the days when it produced all Renault truck and bus diesels.

What is clear is that Deutz must be less than happy with Mr Johansson’s announcement, especially as the engines it has supplied to Volvo for the best part of a decade have a sound reputation for performance, reliability and fuel economy. It seems likely however that the German company should be in line for some component supply business for the new Volvo diesels.

The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.

Published on Monday, June 22, 2009