Volvo gains initial approval to build its second plant in China

Article by Anita Panait, on July 1, 2013

China's State Council has approved "in principle" Volvo Car's proposed plant in Daqing, according to the municipality’s Web site. The proposed Daqing plant will be the carmaker’s second plant in China next to its factory in Chengdu, which is slated to commence producing a stretched variant of the S60 in the second half of 2013, local media say.

The CHY4.6-billion ($754 million) site will have an initial annual production capacity of 80,000 vehicles, which would be expanded to 300,000 units at a later stage, the Web site said.

The Daqing site is set to produce gasoline-powered sedans, sports utility vehicles, multi-purpose vehicles and electric vehicles. China requires foreign carmakers to establish joint ventures with local companies before they could start producing in the country.

To comply with the requirement, Volvo will create a joint venture with its parent Zhejiang Geely Holding Group Co. Daqing has been a major oil boom town in China since the fossil fuel was discovered in the region half a century ago.

The city pledged funds in 2010 to help Geely acquire Volvo from Ford Motor Co.

In exchange, Geely agreed to construct a Volvo assembly plant in the city. Volvo targets to deliver 200,000 vehicles annually in China by 2020, from 44,052 units in 2012, according to LMC Automotive. 

Topics: volvo, china, plant

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