(Yicai Global) Aug. 24 -- Swedish carmaker Volvo’s truck arm is buying the heavy-duty truck manufacturing subsidiary of state-owned Jiangling Motors to start production of its own brand vehicles in China.

Volvo Trucks will pay CNY800 million (USD125 million) to acquire JMC Heavy Duty Vehicle, the two parties said yesterday. The Taiyuan, northern Shanxi province-based plant can perform operations such as stamping, welding, manufacturing of cabs, painting and final assembly.

“To meet demand from Chinese transport operators, the time is right for us to establish a regional value chain with our own heavy-duty truck manufacturing in China,” said Roger Alm, president of Volvo Trucks.

China is the world’s biggest truck market. Last year sales jumped 13.7 percent from the year before to 1.62 million units. Volvo sold over 4,500 heavy-duty vehicles to China last year.

The new Volvo FH, Volvo FM and Volvo FMX trucks will be made in Taiyuan. Production should start at the end of 2022 and the Swedish firm expects to have an output of 15,000 trucks a year. The deal is still pending regulatory approvals.

Editor: Kim Taylor