Volvo has cleared a key hurdle toward winning full government approval to produce cars in China, a source of growing worry over its ambitious global turnaround plan, according to two individuals close to the company.

Volvo Car Corp's leadership believes sales in China are likely to gain momentum when production begins in June at one of the two vehicle assembly factories Volvo and its parent, Zhejiang Geely Holding Group Co, plan to open soon in Chengdu, Sichuan Province, the sources said.

That plant, which is nearly completed, will have capacity to produce 125,000 cars a year. Volvo is also seeking to open an engine factory in China.

The two sources close to Volvo asked for anonymity because of the sensitivity surrounding the plant approval process in China, which involves several Chinese ministries and agencies and ultimately the State Council.

They said the vehicle assembly plants and the engine factory did not yet have approval from the State Council, though they said that was expected.

"The final say is in the hands of the State Council and we believe the State Council supports Volvo Cars' development in China," Volvo Spokesman Per-Åke Fröberg said in an e-mailed statement.

The sources said the vehicle assembly plants in Chengdu and Daqing, Heilongjiang Province received official approval to start production in October and February, respectively.

The engine plant, in the city of Zhangjiakou near Beijing, got a green light from the Chinese government in February.

Reuters