KiwiRail chief executive Jim Quinn yesterday confirmed the contract, saying the details would be released on Monday at a formal launch at Hillside workshops.
The carriages are for the KiwiRail-owned Tranz Scenic TranzAlpine train, which travels from Christchurch to Greymouth. The work includes converting existing carriages into three open-air viewing cars.
The project was first signalled 14 months ago.
Mr Quinn met Hillside staff in Dunedin on Wednesday to tell them of that decision.
He said yesterday the Tranz Scenic contract was not ready to unveil at this week's meeting. The two were "very different projects".
He reiterated the scale of the Auckland job did not warrant the size of "one-off" financial investment required for the contract, whereas, he understood the Tranz Scenic contract would be undertaken by existing staff and resources, without need for any financial boost.
A one-third model of the Tranz Scenic carriages, and initial work on construction of the first carriage, is to be unveiled at Hillside on Monday.
Otago Chamber of Commerce chief executive John Christie, who is chairman of a group pushing for Hillside to get the Auckland work, said he was aware of a pending announcement, but had no idea it was a $40 million contract.
"Nice. This is a real compliment to the staff of Hillside and their abilities," Mr Christie said.
The choice was proof Hillside had the capacity to tender for more work, backed up by other suppliers in the city.
"There are real opportunities here to work and bid for work for the sake of Dunedin," Mr Christie said.
A KiwiRail spokesman said yesterday the carriages, designed by KiwiRail Mechanical Design, were the first new carriages entirely designed and built in New Zealand for many years. Construction would be supported by "key New Zealand component specialists".
Hillside management was unavailable for comment yesterday.
THE CONTRACT
• Worth $40 million.
• 14 new NZ-designed carriages.
• 3 buffet cars.
• 3 open air viewing carriages (conversions).
