Volvo to Get China Approval to Manufacture Cars Here image

Volvo got China’s approval to begin manufacturing vehicles in this market, according to an anonymous source.

Recently, the National Development and Reform Commission approved Volvo’s production plan, but a final approval from the State Council is needed, although, according to the source, the chances of rejection are almost inexistent. Geely Chairman Li Shufu has been breathlessly waiting for this approval as he vowed to have an edge in China when he purchased Volvo in 2010. Unfortunately the government subjected Volvo to the same regulatory procedures applied for all foreign car makers.

This approval will offer Li’s Geely the possibility to manufacture cheaper Volvo vehicles, as the cars manufactured in China are not subject to the country’s 25% import duty, as long as foreign automakers work with Chinese companies in producing vehicles.

During the first two months of the year, Volvo sold 8,719 vehicles in China, up 31%, making the country its second largest market after the US, surpassing Sweden. In China, Volvo offers seven models with prices varying between 249,900 yuan ($40,200) for the C30 and 661,000 yuan for the C70 sedan. Volvo said it also plans to open its first manufacturing facility inChengdu, China.