Volvo may build S40 in US

VOLVO'S next line-up of models may be built in the US at Ford plants, according to a report in the Financial Times.

The Swedish company's car-making division, now owned by Ford, is expected to increase annual production from 500,000 to 700,000 units to meet its new global sales targets.

Volvo's NedCar joint venture plant in the Netherlands - which builds the compact S40 and V40 - is under a cloud as it is not big enough to meet the production volumes being proposed.

The S40 and V40 will be introduced to the US market in September to supplement the 110,000 large-platform cars Volvo sells there already.

A Volvo spokesman says the S40 and V40 could notch up around 20,000 sales in the US annually, although not all of these will be incremental sales.

Ford is believed to be keen to build the replacement for the S40/V40 range off the Focus platform after 2004.

"Where that leaves NedCar is not clear," the Volvo spokesman said.

Producing the S40 replacement at a Ford plant makes sound economic sense as it could result in cost savings of around $400,000 annually.