MELBOURNE, AAP – One hundred new Melbourne trams will be built in the city’s outer southeast to replace ageing stock.

Bombardier Transportation Australia – part of global manufacturing company Alstom – has won a multimillion dollar contract to build Victoria’s next generation trams, the state government announced on Thursday.

The trams will be built at Dandenong in Melbourne’s outer southeast and use at least 65 per cent of local content, in line with project guidelines.

Accessibility groups, passengers and tram drivers will be consulted on the proposed design of the new trams.

Trams from the $1.85 billion project are scheduled to roll out from 2025, leading to the retirement of older high-floor trams.