Swedish truck and bus maker Volvo AB said that it will lay off nearly 1,000 staff at its powertrain unit in Sweden and the United States as the global financial crisis continues to weigh on the demand for heavy vehicles.

Mr Marten Wikfors spokesman of Volvo said that the layoffs will affect 900 workers in the Swedish cities of Skovde, Goteborg and Koping, as well as 65 staff in Hagerstown, Maryland. He added that a number of consultants in Sweden could also receive notices. Volvo Powertrain makes engines, gear boxes and rear axles for trucks.

Mr Wikfors said that "When you see such an extreme slowdown in the financial markets our customers get insecure and stop buying trucks. Of course that also affects Volvo Powertrain since they make the engines for those trucks. There is still a lot of uncertainty in the market and we see no light at the end of the tunnel."

It may be noted that Sweden's large motor industry has been hit hard by the global financial crisis and in October the government was forced to set aside SEK 1.5 billion for extra unemployment support.

The Volvo group has previously announced layoffs of 2,000 workers at truck plants in Belgium and Sweden and 1,350 workers at its construction unit. In October 2008, it reported a 37% drop in third quarter profits saying the global financial crisis has sapped demand for heavy vehicles in Europe, North America and Japan.