In a bid to increase sales, Volvo Cars has decided to open an assembly plant in the US, said The Associated Press. For the North American plant, Volvo Cars would be required to shell out an estimated $500 million. The plant will help strengthen Volvo in a new push by the automaker in the US market.

Reports have revealed that the automaker has considered various locations for the construction of the assembly plant, but has not disclosed the short list of locations as of now. The company is expected to make the announcement in next few months.

According to Hakan Samuelsson, CEO for Volvo Cars, the production at the plant is expected to begin in 2018 with capacity targeted at nearly 120,000 vehicles. The plant will help serve the US and export markets. Volvo wants to revive its annual sales in the US, i. e. annual sales of 100,000 cars and SUV's. The sales figure in 2014 fell 8% to 56,000 vehicles, according to Fortune.

Volvo car was also assessing the likely benefits of opening a plant in Mexico. The carmaker has announced the location of a new plant in the US because of lower transportation costs in the US.

Lars Wrebo, Volvo's head of manufacturing and purchasing, said spending would be identical for distributing the cars from either Mexico or the US, therefore the sites were narrowed to the US. The US factory for Volvo will mark its fifth for in the world, joining two in China and two in Europe. Volvo is confident that the new plant will have enough capacity to exceed a target of 800,000 cars built per year by the end of this decade.

"Volvo Cars cannot claim to be a true global car maker without an industrial presence in the US. Today, we became that. The US is an absolutely crucial part of our global transformation and today's announcement makes it perfectly clear that Volvo is in the US to stay", said Samuelsson.