Swedish carmaker Volvo, owned by Zhejiang Geely Holding Group, has finalised its decision to make Volvo cars in southwestern China, two people with knowledge of the matter said on Friday.
Geely, parent of Geely Automobile Holdings, took over Volvo from Ford Motor in August 2010, marking China's largest auto acquisition.
Since then, several Chinese cities, including Shanghai and the northeastern city of Daqing, have been competing fiercely for Volvo's China car plant, which could be a major boost to the local economy.
They have decided to make Volvo cars in Chengdu. Shanghai will be Volvo's China headquarters and an R&D center, a person who was briefed on the matter told Reuters.
Earlier in the week, Geely chairman Li Shufu went to Chengdu where the automaker's dealers and suppliers are holding their annual meetings, another person said.
Chengdu party boss Li Chuncheng and mayor Ge Honglin met Li again on Thursday, said another source with direct knowledge of the matter.
Geely already operates its own car plant in the Longquan economic development zone on the outskirts of Chengdu.
Expanding in China, the world's biggest automarket, is key to Volvo's goal of doubling sales to 800,000 units in 10 years, Chief Executive Officer Stefan Jacoby said.
Li said in September that Volvo may need as many as three car plants in China with a combined annual capacity of 300,000 units.
A Volvo spokesman in China declined to comment.
The Swedish car maker is scheduled to unveil its China strategies late next week.