Ford has confirmed plans to sell Volvo to the Chinese next year in a deal expected to be worth about £1.25bn.
The US car giant said yesterday that "all substantive terms" had been agreed. The deal will see the Chinese company Zhejiang Geely take control of the Swedish marque beloved of parents for its emphasis on safety above everything else.
The American car-maker has been trying to offload the maker of so-called "Swedish tanks" for the best part of a year. Geely, China's biggest independent car company, was chosen as the preferred bidder in October.
Ford said in a statement: "While some work still remains to be completed before signing – including final documentation, financing and government approvals – Ford and Geely anticipate that a definitive sale agreement will be signed in the first quarter of 2010, with closing of the sale likely to occur in the second quarter of 2010, subject to appropriate regulatory approvals."
Ford said it expected to continue to co-operate with Volvo in the future but did not envisage any shareholding in the Swedish company. More details of the deal are expected in the new year when final details have been ironed out. Should the deal go though, it would be the biggest foreign transaction undertaken by a Chinese motor manufacturer. The expected price is a long way behind the $6.45bn Ford paid for Volvo in 1999.
Volvo employs about 20,000 people, of whom three-quarters work in Sweden. Much of the production could, however, be shifted to China as part of the deal. China is seen as an attractive market for the company. The news of the disposal comes amid increasing concern about the future of Sweden's car-makers, although this has mainly been focussed on Saab, which was outsold by Volvo by nearly four to one last year when Volvo turned in global sales of nearly 375,000 vehicles.
Yesterday's update, unusual given the private negotiations, was aimed at helping Geely to secure financing and approval for the purchase from the Chinese authorities.