US competition authorities give clearance

12/18/2000 3:06 PM EST

U.S. COMPETITION AUTHORITY GIVES CLEARANCE TO AB VOLVO'S ACQUISITION OF
RENAULT V.I. /MACK

Volvo and Department of Justice have entered into a consent decree which
is awaiting approval by U.S. district court in Washington D.C. Thereby AB
Volvo has now received clearance from the U.S. Department of Justice for
the acquisition of Renault V.I. /Mack. AB Volvo and Renault SA expect to
conclude the transaction at year-end.
The approval is subject to the condition that Volvo Trucks' North American
low cab-over-engine (LCOE) business be divested. This segment amounts to
less than 3% of the total heavy truck market in North America.
The Volvo Group is now establishing a new business area, Volvo Global
Trucks, comprising the Volvo, Renault and Mack truck brands. Tryggve Sthen
will be chief executive officer of the new business area. Today Tryggve
Sthen is CEO for Volvo Trucks.
Volvo Global Trucks represents 70% of the Volvo Group's worldwide sales.
The intention is that the management of Volvo Global Trucks will be
operational by the beginning of 2001.

In April of this year, AB Volvo and Renault SA concluded an agreement in
principle whereby AB Volvo will receive 100% of Renault's truck
operations, Renault V.I./Mack, in exchange for 15% of AB Volvo's shares.
The agreement was finalized in July and approved by the European Union
(EU) in September.

"I am very pleased with this decision," says Leif Johansson, Volvo Group's
President and Chief Executive Officer. "It means that after the closing we
can immediately start the integration process. We are very eager to
quickly implement the strategy for the new truck group and the merged
powertrain units. Our intentions are to have a functional management and
organization in place by early next year."
As a result of the acquisition, Volvo Group is becoming the world's
second-largest and Europe's biggest manufacturer of heavy trucks, with a
strong global market presence and almost twice its former volume of
business.

"The acquisition will increase the Volvo Group's possibilities to deliver
outstanding value by supplying world class transport solutions to our
customers and dealers", says Leif Johansson.
Volvo Trucks' and Renault V.I./Mack's combined sales in 1999 amounted to
approximately 151,000 heavy trucks and 22,500 light and medium-heavy
trucks.
Their combined share of the market for heavy trucks in Western Europe
amounts to approximately 28%, and to approximately 24% of the market in
North America.

Department of Justice grants clearance
The U.S. Department of Justice decided to grant clearance to the
transaction under the condition that AB Volvo divests Volvo Trucks' LCOE
business in North America.
This segment represents less than 3% of the total heavy truck market in
North America. In 1999, Volvo Trucks delivered about 2,100 trucks in this
segment.

AB Volvo has agreed with the authorities to divest Volvo Trucks' LCOE
business within three months.
"The LCOE segment is only a limited portion of our North American truck
operations," says Volvo Group CEO Leif Johansson, and we are in
discussions already with identified interested parties.

The divestment involves only those assets associated with the LCOE
operations, and will affect the Xpeditor models within Volvo Trucks North
America.The Volvo trademark and assembly plants are not included.

EU approval granted in September

The EU decided to approve the transaction in September, subject to a
number of concessions, as follows:
* AB Volvo must divest its holding in Scania within a time period of up
to three years.
* Renault V.I. must divest its 50-percent holding in RS Hansa Auto Oy,
the Finnish truck distributor, within a time period of up to one year
following approval of the transaction by the competition authority in the
U.S.
* Irisbus - the joint venture held equaly by Renault and Iveco - must
be rescinded within two years.

Transaction expected to be finalized at year-end
After the necessary clearance from EU and Department of Justice, the 10%
of Volvo's shares that AB Volvo repurchased will be delivered to Renault
as payment for Renault V.I. and Mack.
AB Volvo will then buy back additional shares in order to be able to
deliver the remaining 5% of the company's shares to Renault SA.

Renault will continue to be a Volvo shareholder for at least three years
and has declared its intention to increase its holding in Volvo to a
maximum of 20% through purchases in the open market in the future. Renault
SA's holding in Volvo today amounts to 4.7% of the company's share capital
and 4.8% of the voting rights.

Stronger positions
With the acquisition of Renault V.I./Mack, the Volvo Group becomes the
world's second largest and Europe's biggest manufacturer of heavy trucks.
Following the acquisition, Volvo Group will have a substantial global
market presence, with strong positions in Europe and North America. AB
Volvo's acquisition of Renault V.I./Mack is now creating favorable
conditions for implementing aggressive global strategies for growth in
established and new markets.
"Volvo Trucks, Renault V.I. and Mack complement each other well, both
geographically and product-wise," Leif Johansson says. "Together they
constitute a strong foundation to build a world-leading producer of
transport solutions."

Benefits of coordination

Volvo Group's acquisition of Renault V.I./Mack offers major opportunities
for synergies. It is calculated that after two years the total integration
gains will amount to about SEK 3.5 billion annually. Over a longer term,
the gradual integration of the two companies and their product programs
will yield synergies of approximately another SEK 3 billion on an annual
base. About half of the synergies will take place in procurement, but
substantial synergies have also been identified in the engine sector,
based on the fact that it will be possible to optimize future engine
families for use with Volvo, Renault and Mack products.

Renault V.I./Mack in brief
Renault V.I., including Mack, its American subsidiary, is today the
world's fourth-largest truck manufacturer, with sales of 70,000 heavy
trucks and 19,000 light and medium-heavy trucks in 1999. Renault V.I. and
Mack hold strong positions in the markets for trucks, notably in Southern
and Central Europe and in North America. Their share of the market for
heavy trucks amounts to approximately 13% in both Europe and North

America.
Renault V.I. has recently invested in new product programs in both the
heavy and medium-heavy segments. In Europe, since 1996, Renault V.I. has
introduced the Premium and Kerax heavy truck programs, as well as the
Midlum in the medium-heavy class.

Renault V.I./Mack's sales in 1999 amounted to approximately SEK 50
billion, with operating income of approximately SEK 1.9 billion.
Renault V.I./Mack combined have approximately 23,000 employees, of whom
about 18,000 are in the European industrial and commercial structure.

Background and reasons for the transaction
The acquisition of Renault V.I./Mack is an important step toward Volvo
Group's objective, which is to create a strong group of companies - and
shareholder value - by participating actively in the continuing
consolidation of the truck industry.

The transport vehicle industry has long been one of the most competitive
in the world. The competition became more severe in the 1990s, resulting
in strengthening the trend within the industry toward larger and more
cost-effective constellations. Increasingly high demands are being imposed
on vehicle manufacturers to have the resources and expertise to develop
products of the future. At the same time it is becoming necessary to
allocate investments to volumes of production that are large enough to
yield benefits of large-scale operations and resulting in competitive
levels of costs and prices.
Changed customer structures, greater demands for evolved products and
services such as financing and after-market support, and - in particular -
a changeover from regional to global markets for both customers and
competitors are important driving forces in this trend.
"Renault V.I./Mack is providing the Volvo Group with new possibilities to
create further added value for dealers and customers," Leif Johansson
says. "The three truck makes - Volvo, Renault and Mack - will be kept
separate. The acquisition gives substantial benefits of scale in the
industrial system. Volvo Trucks' and Renault V.I./Mack's powertrain,
purchasing and product-development operations are being merged to achieve
the strongest-possible synergy effects. Taken as a whole, these factors
are helping to create world class transport solutions which will give
increased customer value and improve the conditions for growth and
profitability - and for shareholder value."

December 18, 2000

For additional information, please call:
Stefan Lorentzson, AB Volvo, phone +46-31-59 10 90,
mobile +46-705-59 10 90