Volvo to build second factory in Heilongjiang

PUBLISHED : Friday, 24 June, 2011, 12:00am
UPDATED : Friday, 24 June, 2011, 12:00am


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Zhejiang Geely Group's Sweden-based Volvo Car unit is planning a 4.58 billion yuan (HK$5.51 billion) investment on a second Chinese carmaking plant in the northeastern city of Daqing, according to a statement on a central government website.

Volvo, which the privately held Zhejiang Geely bought from Ford for US$1.5 billion last August, has been hinting for a while at building a plant in Daqing, an oil-producing town in Heilongjiang province.

But a project overview published this week on the website of the Ministry of Environmental Protection offers the most detailed picture yet of the scale of the enterprise.

Volvo Car China plans to build a facility with a capacity to make 80,000 cars per year. The carmaker will start trial production in 2013 on three Volvo models: the XC60 crossover sport-utility vehicle, a so-called '113K' sedan and an unnamed minivan, according to the ministry's statement. The environmental component of the investment would total 57.97 million yuan, it said.

'The Ministry of Environmental Protection of China is currently reviewing the environmental impact assessment for Volvo Car Corporation's Daqing factory project,' Volvo China said yesterday.

'Construction of the factory still needs relevant government approvals for commencement,' the company said.

Since its acquisition by Zhejiang Geely, Volvo has made no secret of its ambitious plans for growth in the mainland market. Earlier this year the company set an official target of selling 200,000 cars on the mainland annually by 2015, up from about 30,000 cars last year.

Volvo has also said it plans to break ground for its first wholly owned mainland car plant in Chengdu in the third quarter of this year and to start production in 2013. The Chengdu facility will have an initial output capacity of 100,000 cars per year, and analysts have speculated it will build the S60 luxury sedan.

'Volvo Car Corporation has a plan to manufacture the S60 [luxury sedan] in China. The timetable and manufacturing base are not fixed yet,' the company said yesterday.

Goteborg, Sweden-based Volvo is also planning a research and development centre in Shanghai's Jiading district, where it recently set up its new mainland headquarters.

State firms owned by the governments of Daqing and Jiading helped bankroll Zhejiang Geely's purchase of Volvo, contributing a combined 4 billion yuan in financing, or roughly a third of the purchase price, according to Ford's filings to the US Securities and Exchange Commission.