Volvo to produce S40 in China

Volvo is to begin production of the new S40 model in China, in a bid to compete on equal terms with local carmakers in the country, the company has said.

“Local production is the key to remain competitive in China,” said the chief executive of Volvo Cars, Fredrik Arp.

“We are facing a scenario where the import duty is levelling out on 25 percent and our main competitors are already producing their volume models locally.”

The car will be built at a production plant in Chongqing, in the south west of the country, owned by Volvo’s partner in China, Changan Ford. The company is aiming to manufacture 10,000 cars a year there.

Although Volvo has had an office in Beijing since 1994, it has lagged behind other European brands such as Volkswagen and BMW in terms of local production. There may be representatives in 45 cities but in 2004 only 3,000 units were sold in China.

“Local production will make our position even stronger since we can offer our main volume model at a very competitive price,” said Fredrik Arp.

The Local