Ford Motor Co.'s (F) Volvo Car Corp. said on Monday it would begin making cars in China this year, a step into the world's third-largest car market that other upmarket automakers took years ago.

Chief Executive Fredrik Arp said Volvo would build its S40 sedan at a plant owned by Changan Ford, a Ford joint venture in the southwestern city of Chongqing.

While Volvo conceded it was late in entering a increasingly difficult market where profits margins were shrinking, the company was confident Chinese manufacturing operations would be profitable as early as next year.

Volvo said it could reach its Chinese manufacturing target of 10,000 cars a year in 2007, and was working with a number of Changan Ford's local suppliers to meet the government's local content requirements and the company's quality standards.

"We are, after working with (Changan Ford) on this project for over a year, convinced that their factory, working together with our own experts, can produce the quality Volvo requires," Arp told reporters.

"At 10,000 units we will be making money," Alexander Klose, the head of Asia Pacific for Volvo told Reuters.

Changan Ford is a joint venture between the second-largest U.S. car maker and Changan Automobile Co. Ltd.