Despite growing competition in the automotive market, Volvo is confident about its development in China, said Lars Danielson, senior vice-president for China operations, in an exclusive interview with China Daily.
Danielson said Chengdu, where the carmaker has its first China plant, is "very important".
"For Volvo Cars, the Chinese automotive market is unique. It has the strongest growth momentum in the world," he said.
In the past few years, some of Volvo's powerful competitors including BMW and Mercedes-Benz have identified the momentum and built facilities in China.
"To have a successful presence in the country, any auto brand must build up its own local manufacturing," Danielson said. "From this perspective, Chengdu is very important to Volvo Cars. We have established our first local plant in Chengdu to better understand and satisfy the demands of the country's consumers."
Volvo now sells about 450,000 cars annually, a number the carmaker projects will grow to 800,000 by 2020.
"The Chinese market is very crucial for Volvo Cars to achieve this strategy. The annual sales volume in the country is around 50,000 units," Danielson said.
"In the first phase, we aim to expand our production capacity (at the Chengdu plant) to 120,000 units and adjust capacity from time to time afterwards," he said.
The plant will begin formal operation in the fourth quarter of this year with the S60L the first locally built model.
Volvo's existing models sold in China are the S series sedans including the S40, S60, and S80L, the XC series including the XC60 and XC90 and the V series including the V60 and V40.
"The V series introduced to the domestic market last year is a combination of a recreational wagon featuring easy control and a multi-purpose vehicle featuring a spacious interior. They are the best selling Volvo products on the global market," Danielson said.
He said Volvo continues to maintain its low-profile Scandinavian luxury and has unique advantages in environmental protection.
"Even by EU criteria, the Chengdu plant reaches a very high standard," he added.
"Take volatile organic compounds for example. Our VOC parameter is quite low - the same level used in our European plants. We also keep a very high standard in wastewater discharge," Danielson said.
He said Volvo did a lot of research before choosing Chengdu as its production site.
The company is quite satisfied because the city has well-developed industries, a rich talent pool, sound infrastructure and is becoming increasingly globalized, he said.