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Last Updated: Monday, 20 March 2006, 08:03 GMT
Volvo to start Chinese production
Volvo S40
Volvo is to start making its S40 model in China
Volvo is to become the latest Western carmaker to start producing vehicles in China, the firm has confirmed.

The Swedish-based firm, a subsidiary of US giant Ford, is to produce its S40 saloon at a plant in the south western city of Chongqing.

Volvo said it aimed to manufacture 10,000 cars a year.

The cars will be made at a factory owned by Ford's Chinese joint venture Changan Ford. Volvo said it was already working with local Chinese suppliers.

Wealthy Chinese

"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] Volvo quality," said Volvo chief executive Fredrik Arp.

Volvo currently trails behind its rivals in China, where it sold just 3,000 cars in 2004.

Western car firms are increasingly targeting the China market due to the fast growth of a cash-rich and style-conscious Chinese middle class.

Volkswagen and BMW already have plants in China, and DaimlerChrysler is currently building a facility in Beijing to manufacture Mercedes-Benz vehicles.

Chinese car sales grew 15% in 2004 after almost doubling in 2003.

Car sector analysts now expect continuing growth of between 10% and 15%.

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