At the same time, the facility will switch from its current production of S70 and V70 models to the next generation of medium-sized cars, using the P1 platform, as well as to production of the S60, a P2 platform vehicle.

The decision will mean the construction of a new 50,000 square-meter final assembly plant and employment of around 1,800 new staff. Design work on the new facility is commencing immediately and building will start next year. Installation testing is planned for mid-2002, with production starting in mid-2003.

More than 450 million Euro has been invested at the facility in the past five years. This included a new paint shop in 1997 and an extension to the welding plant in 1999. Additional equipment in the form of welding robots and paintshop robots will be required.

The expansion at Ghent goes hand in hand with expansion at the company's Torslanda plant in Göteborg, Sweden, which will take over production of the larger models and increase capacity to 230,000 cars a year.

Curt Germundson, Senior Vice President Manufacturing, said that Volvo Car Corporation could now concentrate its volume production in two factories, providing the company with economy of scale advantages and the possibility of effectively rationalizing its activities further.

"By investing in expanded final-assembly facilities in Ghent and allowing the Torslanda plant to concentrate on larger cars, we will reach the established target in our existing Volvo factories, which is a major benefit," he said.

"Both Ghent and Torslanda are high-quality production facilities and Ghent has ably demonstrated its superb quality by winning several international awards," he added.

Last year, Volvo's Ghent plant added to its list of quality achievements by receiving the Japanese TPM World Class Award and the European Quality Award for Operational Units.

The Volvo facility in Ghent became the company's first assembly plant outside Sweden when it launched operations in 1965. It currently employs 3,746 personnel and covers a total area of 477,000 square meters.