Volvo to Make Cars in China

Ford Motor Co.’s Volvo Car Corp. will begin producing cars in China this year, Volvo Chief Executive Fredrik Arp said Monday.

The company will build its S40 sedan in the southwestern city of Chongqing at a plant owned by Changan Ford, a joint venture of Ford and China’s Changan Automobile Group Co.

Volvo is aiming to manufacture 10,000 cars a year there and working with a number of Changan Ford’s local suppliers to meet the government’s local content requirements, Arp said.

“After working with Changan Ford for over a year, we have ensured that their factory, cooperating with our own experts, will meet our high demands” for quality, Arp said in a statement.

Volvo lags behind rivals such as Volkswagen’s Audi, which has been making expensive cars for years for an increasingly cash-rich and style-conscious middle class in the world’s third-largest vehicle market.

Volvo sold just 3,000 vehicles in China in 2004, out of 456,000 it sold worldwide.

BMW set up its China factory in 2003 and DaimlerChrysler is building a plant in Beijing that will be able to build 25,000 Mercedes-Benz cars annually.

Chinese car sales grew 15% in 2004 after almost doubling in 2003, and analysts expect growth of 10% to 15% this year.