Ford mulls plan to build Volvos in China

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Ford may use Volvo, their Swedish daughter company, to bolster their presence in the growing Chinese car market, Mark Fields, the executive vice-president of Premier Automotive Group, Ford?s luxury division, told Financial Times Deutschland on Monday.

In an interview, Mr Fields said that production of Volvo models in China is a distinct possibility, but no definite decisions had been made.

?China is an important market for us and this is why we are looking into the possibility of producing Volvo cars there,? he said.

Volvo has been working closely with Ford, which produced its first car in China two years ago.

?Turnover for PAG brands has risen 34 per cent in China in the first quarter, but market volume has shrunk,? Mr Fields said. ?As importers, we do not have a huge number of cars there, but we have made a start,? he added.

PAG will use the Range Rover Sport and the Volvo XC 90 to break into the Chinese market. ?The Chinese want the newest models ? they are not satisfied with last season?s cars,? he said.

Currently, PAG only produces cars in the UK and Sweden. But exchange rate losses have hit the company hard. In the first quarter of 2005, it recorded losses of $55m compared with profits of $33m a year ago.

Mr Fields expects the group to make profits between $300m and $600m during 2005. But exchange rates and the high costs of raw materials could mean that results will be at the lower end of the spectrum, he said.

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