Volvo Seeking to Divest Aero Division

Swedish manufacturing group is streamlining to maximize its resources in the commercial vehicle sector.

AB Volvo, the Swedish manufacturer of commercial vehicles, among many other products, is seeking a buyer for its Volvo Aero business unit. Volvo Aero designs and builds aircraft engine components and has numerous manufacturing programs in place with the world’s major aircraft engines. AB Volvo indicated Volvo Aero’s products are to be found in more than 90% of the world’s commercial jets.

The group offered no insight to the timing of the sale, nor of the revenue it expects from the divestiture.

“One of the prerequisites for a transaction being implemented is that a divestment could enable Volvo Aero to enter into a structure that would enhance the company’s opportunities for further development in its sector,” stated Volvo CEO Olof Persson. “Another requirement is of course that we are paid a reasonable price. We are currently conducting talks with a number of potential buyers, but these are still at an early stage and no definite decisions have been made.”

The parent company indicated the prospective sale is “a step in further streamlining the Volvo Group towards commercial vehicles”. It added that the “streamlining” effort has been in progress since the late 1990s, as the company has grown its presence in the commercial vehicle sector.

AB Volvo sold its automotive manufacturing division to Ford Motor Co. in 1999, and that unit has since been sold to China’s Zhejiang Geely Holding Group. Today the group maintains a series of product lines in the commercial vehicle sector, producing trucks, buses, and construction equipment, as well as component parts and systems. The group has about 105,000 workers, of whom about 3,600 are employed by Volvo Aero at plants in Sweden, India, Norway, and the U.S.

The latter is Volvo Aero Connecticut, near Hartford, which machines large-scale components like fan cases for aircraft engines and industrial gas turbines.

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