Chinese snap up Volvo from Ford

Expansion: Car manufacturer Geely has the backing of the Chinese government to buy the firm

Ford, which is the only major US car-maker to avoid bankruptcy since the economic crisis, said that a deal would be completed in the first quarter of 2010.

Ford had been in negotiations with Geely since October but details like the transfer of intellectual property had proven stumbling blocks.

Chinese car-makers such as Geely are expanding quickly but are desperate for access to the design and manufacturing knowledge of established brands like Volvo, known around the world for its safety-first design approach.

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Geely, which has the backing of the Chinese government, will finance the purchase with a mixture of cash, bank loans and funds from a group of investors.

Geely aims to expand production to 1million cars a year from the current 500,000 sold mainly in Europe and North America.

The Chinese group believes it can sell 200,000 cars a year in China immediately and plans to create a new design to be sold only in China in the coming years.

Geely, headed by Chinese tycoon Li Shufu, said Volvo would remain a 'leader in safety and environmental technologies'. Geely has vowed to keep Volvo's production facilities, headquartered in Gothenburg, running although it does plan to begin production in China.

The jobs of Saab's 4,000 workers are less certain despite the last- ditch bid by Dutch carmaker Spyker to buy Saab from General Motors, which had planned to wind down the loss-making brand.

Spyker said last night that it still hoped to pick up Saab, saying it had the backing of the Swedish metal workers' union.

Rumours circulated yesterday that Russian-backed Spyker was being supported in its bid by a Dutch billionaire, fanning hopes that an eleventh-hour deal could be struck that would save jobs at Saab.

GM has already sold designs and technology owned by Saab to Beijing Automotive Industry Holding Corp, China's fifth biggest car-maker, for $200million.