AB Volvo announced it will buy a heavy duty truck subsidiary of Jiangling Motors Corp. for approximately $125.7 million, Reuters reported.
Volvo will also receive a manufacturing plant in Taiyuan, a northern Chinese city.
Truck makers are choosing China for production because of increased e-commerce and new orders as lawmakers implement stricter safety and emission regulations.
Production of Volvo FH, Volvo FM and Volvo FMX trucks will begin at the plant at the end of 2022.
The site is planning for an annual production capacity of 15,000 trucks a few years from now.
Volvo said capacity could be increased further.
Ford also holds a stake in Jiangling Motors Corp., which makes vans and SUVs with the Ford brand in China.