Deutz set to power Volvos
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by Charles Young • Deutz engines could eventually power Volvo light trucks under plans by the two companies to extend their diesel engine co-operation.
German engine manufacturer Deutz plans to become Volvo's main supplier of small and medium diesels.
Volvo will share the development of medium sized diesels and concentrate on producing engines in the eight to 16-litre range which it will supply to Deutz.
Volvo currently fits four to six-litre engines in its FLC and FL6 ranges, so under the latest agreement, to be finalised in the autumn, these trucks could be powered by Deutz units.
In 1997 Volvo produced around 30,000 medium capacity diesel engines; all these will eventually be replaced by Deutz units.
However, which engines will end up where has yet to be decided as the agreement covers
Volvo's truck, bus, construction, marine and industrial applications.
Deutz already supplies engines for Volvo's construction applications: Volvo now says it will take a 10% stake in Deutz.
Deutz stresses that the deal will help secure its independence. Executive chairman Anton Schneider adds that there are no plans to sell more Deutz shares; he rules out a takeover by Volvo.
Volvo will now be able to concentrate on developing its top-of-the-range diesels.
E Volvo's first-half profits came in ahead of target. The company made Skr4.7bn (S585m) in the first six months of 1998: chief executive Leif Johansson described the results as "decent".