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Geely-owned Volvo Car Group said on Sunday it had begun production of its best-selling XC60 crossover at its plant in Chengdu, taking a further step toward supplying locally-produced cars in China as well as opening the door to overseas exports.

Volvo said in a statement the start of XC60 production would add 500 new manufacturing jobs at its plant in Chengdu, in central China, where it already makes another model, the S60L. The XC60 is Volvo's best-selling car.

"The start of XC60 production in Chengdu is the latest milestone in Volvo Cars' transformation," Volvo Cars Chief Executive Hakan Samuelsson said in a statement.

"It will be instrumental in boosting Volvo’s overall growth in what is now our largest market."

Strong growth in China has helped Volvo rack up 16 straight months of rising sales though lacklustre performance in the United States - once its biggest market but now eclipsed by China - remains a headache.

Volvo, bought by Zhejiang Geely Holding Group Co. GEELY.UL from Ford Motor Co. F.N in 2010, aims to nearly double annual sales to 800,000 cars by 2020 and stake out a claim in a premium market dominated by rivals such as Daimler's (DAIGn.DE) Mercedes-Benz and BMW (BMWG.DE).

While one of Sweden's top exporters and employers, Gothenburg-based Volvo remains a small player in the global autos industry though it recently rolled out its first new car developed under Chinese ownership, its XC90 SUV.

Volvo has also said it expects to begin exporting cars from its plants in China to the United States next year.