STOCKHOLM (Reuters) - Sweden's AB Volvo has picked Monterrey in northern Mexico as the site for its new North American heavy-duty truck factory and expects construction to cost $700 million, it said on Friday.

Volvo had announced in April that it aimed to build a plant in Mexico to supply the group's Volvo Trucks and Mack Trucks businesses in the United States and Canada as well as Mack Trucks in Mexico and Latin America.

"Monterrey provides significant logistical efficiencies for supporting sales to the southwestern and western regions of the U.S., and to Mexico and Latin America," its statement said.

The company, which has targeted growth in North America as a strategic priority, expects the plant to start operations in 2026.

(Reporting by Anna Ringstrom; Editing by David Goodman and Jason Neely)