Volvo plans to manufacture vehicle in China

Gent. Volvo intends to produce the new vehicle at a Ford factory in China from 2005 subject to government approval.

"Our plans are already quite advanced," Curt Germundsson, the board member responsible for manufacturing at the Volvo Car Corporation, said at the model's premiere in Frankfurt. The automaker has not said which vehicle it intends to build in China.

Volvo will not be opening its own plant but will be using capacity at the Ford Motor Company factory in China.

The parent company is already manufacturing the new Fiesta in a joint venture with the Changan automobile group in Chongquing. "It makes everything so much easier," Germundsson said.

The date for the production start-up depends on when the Chinese government licenses the project. Volvo will make use of that time by expanding its dealer network in China, where last year it sold 3,000 cars.

The Swedish company has invested 340 million euros in a plant in Gent, Belgium, where S40 production starts September 23. The capacity at the plant, which currently makes the S60 and V70 models, has increased from 150,000 to 270,000 vehicles.

The company plans to make 8,000 units of the new S40 in 2003. The goal is to reach full capacity of 3,400 units per week by July 2004. The annual production target for 2004 is 70,000 S40 models.

The station wagon version, which will be called V50, will launch in January 2004. Further variations of the model - convertible, coupe, off-roader - are also planned. However, so far only the convertible has received the go-ahead. It will be built from spring 2005 in Udevalla, Sweden.

The new basic Volvo model shares approximately 60 percent of the components with the Mazda3 and the next generation Ford Focus. According to project manager Magnus Jonsson this is just as cost effective as the joint venture with Mitsubishi at the Born plant in the Netherlands, where the S40 is still being built. The joint venture with Mitsubishi will end in spring 2004. The Born plant will then be taken over by Mitsubishi and Smart for a joint production.

Volvo used its move to Gent to focus on increasing its productivity with a new plant layout and the greater use of robots. In future it will take only 17 man-hours to build a S40 instead of the current 21 hours. Manufacturing costs per car will decrease by 19 percent, labor costs will fall from 600 euros to 511 euros.

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