Zhejiang Geely Holding Group Co., the owner of Volvo Cars, may begin building a plant in China this year that will make the Swedish brand’s cars.

“We have yet to decide on the location for the new plant, with Chengdu and other locations under study,” Geely President Yang Jian said in an interview today, referring to the capital of southwest Sichuan province. There is an opportunity for construction to begin this year, he said.

Geely, based in Hangzhou in eastern Zhejiang province, bought Volvo Cars from Ford Motor Co. in August for about $1.5 billion. Expanding in China is key to Volvo’s goal of doubling sales to 800,000 cars in 10 years, Chief Executive Officer Stefan Jacoby has said.

China’s vehicle sales jumped 32 percent in 2010, helping the nation stay the world’s largest auto market for a second year. Chinese carmakers will face “pretty big difficulties” this year after the government scrapped stimulus measures that boosted deliveries last year, Dong Yang, vice chairman of the China Association of Automobile Manufacturers, said yesterday.

Shares in Geely Automobile Holdings Ltd., the group’s listed unit, fell 1.1 percent to HK$3.68 in Hong Kong. The stock fell 20 percent in 2010.

Geely is adding more expensive models to lure customers from rivals including General Motors Co. and Toyota Motor Corp. The company said Jan. 6 that it aims to increase sales and production by at least 18 percent this year, after increasing sales 26 percent to 415,000 units in 2010.

The automaker plans to add six new models this year, Vice President Liu Jinliang said today in Taipei. The average price of Geely’s models will exceed 50,000 yuan ($7,548) this year, compared with 47,000 yuan in 2010, he said.

The automaker is also in talks with Taiwan’s Foxconn Technology Group about developing parts for alternative energy- powered vehicles, President Yang said today in Taipei, without elaborating.

Via: Businessweek.