ArvinMeritor Inc. has announced a memorandum of understanding with the Volvo Group to create two new joint ventures.

The joint ventures would expand ArvinMeritor's capacity to produce commercial vehicle drive axles.
The two new joint ventures, owned jointly by ArvinMeritor and Volvo, would assume control and operation of two Volvo Group manufacturing operations in Lyon, France next year. ArvinMeritor management would operate the two facilities -- an axle plant and a foundry.
Details of the pending agreement have yet to be finalized. The new arrangement would result in the manufacture and distribution of more than 100,000 axles annually.
"This is truly a win-win-win business arrangement: A win for end-user customers, a win for the Volvo Group and a win for ArvinMeritor and its shareowners," said Brad Arnold, vice president and general manager of ArvinMeritor's Commercial Vehicle Systems axle business.
"We would retain the Volvo hub reduction products utilizing Volvo and Renault VI technology, and merge them with ArvinMeritor's 100-year history of making the most advanced, highly engineered drive and steer axles," added Arnold.
A portion of non-drive axles currently made at Volvo's Koping, Sweden, facility, would be shifted to production at ArvinMeritor's Lindesberg, Sweden, facility and to the St. Priest joint venture.
Volvo views the new ventures as another step in its strategic outsourcing of commercial axle manufacturing. In late 1998, ArvinMeritor acquired Volvo's commercial axle manufacturing facility in Lindesberg, Sweden. As part of that transaction, ArvinMeritor entered a long-term supply agreement with Volvo for heavy-duty drive axles. According to Arnold, the Lindesberg plant integration into ArvinMeritor's global axle manufacturing network has been a successful one.