Volvo Starts S40 Production in China

Locally-Built S40 to Improve Volvos Presence in China

One of Volvos biggest successes, the S40 compact premium sedan, is about to take Swedens premiere brand into previously unexplored territory. After much planning, internal debate and consideration, Volvo has given the green light for automobile production in China, in order to improve the brands presence in the worlds most rapidly growing car market.

Volvo will start by building the new S40 at parent company Fords facility in Chongquing China. Ford invested in the Chinese facility with partner Changan in 2001, and has been building cars there since 2003. Ford currently builds several of its products at this plant, including the Chinese-market Ford Focus, Fiesta, Mondeo, and Mazdas popular 3.

“A Volvo must be a Volvo car in all aspects, no matter where it is produced. After working with Changan Ford for over a year, we have ensured that their factory, co-operating with our own experts, will meet our high demands on the Volvo quality,” says Fredrik Arp, President and CEO of Volvo Cars.

Volvo currently builds its cars in three factories; the S40/V50 compacts in Belgium, the S60, V70, S80, XC70 and XC90 at its home Torslanda facility in Gothenburg, Sweden, and the all-new folding hardtop convertible C70 at the new joint venture plant with Pininfarina in Uddevala, Sweden.

Volvo used to produce the S40 and V40 in the Nedcar assembly facility in the Netherlands, prior to selling its share to Mitsubishi, which currently builds the Colt alongside the smart forfour subcompact. Volvo also built some North American market 700 and 900-series rear-wheel drive cars and the S70/V70 series cars in Halifax, Nova Scotia, Canada, until its close in 1998.

What prompted Volvo to start building the S40 in China was the fact that many of the brands competitors, including BMW, Cadillac, Volkswagen and Audi, produce cars in China. Another factor that encouraged Volvo to build the S40 locally in China was the high duties on import products.

“Local production is the key to remain competitive in China. We are facing a scenario where the import duty is levelling out on 25 percent,” added Arp.

With a total of seven new products to be launched between 2006 and 2009, including the C70 Coupe-Convertible, the recently introduced S80 luxury sedan, and the compact C30 hatchback, Volvo expects to have rapid growth in the years to come, particularly in China. According to Volvo, the brands sales of passenger cars in China increased 84 percent compared to the previous years sales, and are expected to continuously grow. As for the S40, Volvo aims to produce 10,000 units per year in China.