STOCKHOLM—Volvo Cars, owned by China's Geely Holding Group, has decided to temporarily halt production at its main Swedish plant for one week as demand in the automotive market continues to slip in recession-hit Europe.

The Goteborg-based carmaker says Monday the production halt will affect some 3,300 employees and will last from Oct. 29 to Nov. 2. The workers will be compensated through a variation of paid leaves.

Volvo Cars' CFO and Acting President, Jan Gurander, says "Europe is the main market for Volvo Car Corporation and the continued recession is naturally affecting the demand."

On Oct. 1, the company decided to slow the production pace of the Torslanda plant, from 57 cars an hour to 50 cars.

Volvo Cars has a global workforce of around 22,000.