After selling imported Volvos through an independent dealer network since the mid-'90s, the company is finally setting up production of its S40 model in China. With import duties running around 25 percent, Volvo simply can't be competitive in the mid-market segment without in-country production.

So far, Chinese production will be limited to the S40, which will be built at Changan Ford's production plant in Chongqing. Volvo is targeting annual production of 10,000 units.

There appear to be no plans at present to manufacture higher-end Volvos in the Middle Kingdom. The company plans to launch its C70 convertible in China in 2007, followed by its all-new flagship S80 sedan.

[Source: Volvo Cars]