Zhejiang Geely Holding has received an approval from the Chinese Ministry of Industry and Information Technology (MIIT) to build a new $631m passenger automobile plant in Chengdu, China.
The new plant will manufacture Volvo cars and is scheduled to start operations in 2013.
The facility will produce about 500,000 units per year and the first two models are scheduled to be built are Volvo's XC60 luxury SUV and S60L luxury sedan.
Upon completion, the MIIT will conduct an examination of the plant's infrastructure after which vehicles produced at the site will be allowed to be sold in the country.
Volvo had previously revealed its plans to sell 200,000 cars in China by 2016.
Zhejiang Geely has six vehicle and power assembly manufacturing bases in Linhai, Ningbo, Shanghai, Lanzhou and Xiangtan as well as an annual production capacity of 300,000 entire vehicles, 300,000 engines and 300,000 transmissions.
