The car manufacturer said in a statement on Thursday that it would be hiring 1,300 people at the Torslanda plant in western Sweden.
Most of the jobs will be on the production line, but they will also include maintenance posts and senior roles.
"Volvo Cars will add a third working shift in its Torslanda, Gothenburg plant to meet the increasing customer demand for the company's new cars," the group said in a statement.
"Volvo Cars global retail deliveries were up by 9.2 percent during the first nine months of the year," the group said, adding that it expected to sell about 470,000 cars by the end of the year, "an all-time high sales result for the company".
The expansion at the group's Gothenburg plant in early 2015 will coincide with the production start for the XC90 SUV, Volvo's first fully new car since being bought by Zhejiang Geely Holding from Ford Motor Company in 2010.
Chief executive Haakan Samuelsson told Swedish network Sveriges Radio that the group would start recruiting production line workers, immediately.
"It takes time to find 1,300. We're starting now and must be ready in April because then we need the capacity," he said, adding that the group had thought hard about whether it was the right time to expand or if it's outlook was "too optimistic".
In August the group doubled its sales growth outlook for 2014 to 10 percent on the back of a surge in demand from Chinese car buyers, which grew by more than a third.
Volvo Cars was separated from the Volvo Group's truck, engine and construction machinery business in 1999 and employs about 23,000 globally.
The Torslanda plant in western Sweden. Photo: Volvo