Ford Motors' Volvo Car unit will for the first time produce an automobile in China, part of a general trend of foreign automobile companies localising production of top-selling luxury models.

The carmaker said on Monday it would begin producing the S40 sport sedan with partner Changan Ford in Chongqing, a southwestern Chinese city that is already a hotbed of car and motorcycle manufacturing.

Volvo, which up until now has been a relative latecomer to China's car market compared with Volkswagen and BMW, aims to sell 10,000 units a year. Volvo sold 4,800 vehicles in China last year, an increase of 84 per cent.

"We are convinced that their factory working together with our experts can produce the Volvo quality we require," said Frederik Arp, Volvo Car's chief executive, in Beijing. "It [the S40] has all it takes to fit into the demand structure."

Volvo's decision to manufacture locally highlights a common strategy by leading western carmakers to target mainland Chinese buyers by shifting production of best-selling models to - and sourcing parts from - China. The company currently makes most of its cars in Sweden and Belgium.

The move also comes at a time when Chinese consumers' tastes in cars have become more sophisticated. The S40 is expected to compete with similar mid-sized models from Mercedes-Benz, BMW and Audi, and Mr Arp said they would target consumers under age 40.

"Other major players are on the move," said Mr Arp, who argued local production will be the key to being competitive in China. "When the competition becomes tougher, it is not enough to offer a very attractive product from a premium brand."

Mr Arp said as much as half of the parts for the China-made S40 would come from local suppliers and stressed there would be stringent quality inspections, especially during the first two months of production.

Per Norinder, general manager of Volvo in China, said the S40 prototypes from Chongqing have already passed Volvo crash safety tests in Europe and China. "It will be a car with the same quality as we deliver in our imported cars," he said.

Volvo, long known for its leading-edge safety features, is looking to debut more models in China, including the C70 convertible by the end of this year.