In its statement, Ford said that the prospective sale “would ensure Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise, while enabling Ford to continue to focus on and implement its core ONE Ford strategy.”

For Ford, closing the sale would provide it with cash it could use toward CEO Alan Mulally's goal of speeding up debt repayment as the automaker moves toward profitability it has projected for 2011.

Ford was the only U.S. automaker to avoid bankruptcy and a U.S. government bailout thanks to the $27 billion borrowing program it completed before the crushing decline for the U.S. auto market that began in 2008.

No stake in Volvo

While Ford will continue to cooperate with Volvo in several areas after the sale, the company does not intend to retain a shareholding in the business once the deal is finalized.

Chinese carmakers are taking advantage of a crisis-sparked shake-up of the auto industry, tapping into Western brands in a bid to boost their technology and take advantage of a fast-growing home market. China car sales are expected to overtake the United States for No. 1 in the world when full-year figures are published.

Zhejiang Geely, the parent of publicly traded Geely Automotive, was named by Ford as preferred bidder for Volvo in October.

The estimated $1.8 billion deal would be the largest overseas acquisition by a Chinese automaker.

Ford paid $6.45 billion for Volvo in 1999.

Ford wrote down the value of Volvo by $2.4 billion following a review of the brand's prospects in January 2008.