Volvo Truck Corporation (Volvo) of Sweden received $27 million in MIGA coverage for its $30 million loan guaranty to expand the customer financing services of subsidiary, Volvo Peru, S.A.(VP). MIGA's guarantee covers Volvo against currency transfer, expropriation, and war and civil disturbance risks.
The loan is being financed by Bank of America and will expand Volvo's long-term customer financing through its credit leasing program, CrediVolvo. The first of its kind for the Peruvian truck and bus market, the program will give individual owners and small enterprises access to a much-needed source of financing. CrediVolvo is estimated to have increased sales of trucks and buses in 1995 by 35 percent.
VP is the only truck manufacturer in Peru with both an assembly plant and a nationwide maintenance network. Availability of its specially built trucks, designed for Peru's mountainous road conditions, is significant because of the country's reliance on road transportation.
The project is expected to result in greater local sourcing of parts and components. In 1992 VP began ordering only parts that could not be procured locally, rather than completely knocked-down kits. The next year VP bought locally about $10 million in components and parts, which represented about 30 percent of the total value of the goods and services it produced.
