BEIJING - Volvo Car
Corp, the Swedish arm of Ford Motor Co, has
announced that it will kick off production in
China this year to boost its presence in the
world's third-biggest and fastest-growing car
market.
The Goteborg-based carmaker said
its new S40 sedan would be assembled at Ford's
joint venture with China's Chang'an Motor Corp in
Chongqing municipality later this year, under a
technical licensing deal.
The joint
venture, or Chang'an Ford, will be Volvo's third
manufacturing site in Asia after those in Thailand
and Malaysia. Volvo executives said the company
expected the new car's annual output in China to
reach 10,000 units next year. Volvo's
plan
appears to be motivated by rivals such as Audi,
BMW and Mercedes, which are enjoying higher sales
in China due to early local production.
"China will probably be the most important
car market in the world within five to 10 years,"
said Fredrik Arp, Volvo's chief executive officer.
Sales growth in China and other emerging
markets was important for Volvo if it was to
achieve its goal of selling 600,000 vehicles
annually by 2009, up from last year's 444,000
units, said Arp. He became CEO last October.
Volvo currently sells the new S40, S80
sedan and XC90 sport utility vehicle as imports in
China. In 2005, its China sales surged by 84%
year-on-year to nearly 5,000 vehicles, including
1,400 S40s.
Volvo's sales accounted for
less than 4% of China's premium car market, which
was 130,000 units last year, said Per Norinder,
general manager of Volvo Car China.
In
2005, Audi sold 59,000 vehicles in China.
Meanwhile, China sales of BMW and Mercedes stood
at 24,000 and 16,000 units respectively.
At the Beijing Asian Games Village
Automobile Exchange, an imported 2.4-liter Volvo
S40 sells for between 350,000 yuan (US$43,614) and
450,000 yuan.
Yale Zhang, a Shanghai-based
analyst with US auto consultancy CSM Worldwide
Corp, said the Volvo S40, competing in the entry
luxury car segment, had potential in China.
"Volvo's safety concept has been well
received by Chinese customers, and the entry
luxury segment will boom in the foreseeable future
as private customers will upgrade their vehicles
from 2008," Zhang said.
Chang'an Ford,
which will assemble the Volvo S40, now produces
Ford Fiesta, Focus and Mondeo sedans as well as
the new Mazda3 sedan. Mazda is also an affiliated
brand of Ford.
Industry statistics showed
that China's car market grew by 27% last year from
2004, to 3.1 million units.
