Ford confirmed on Wednesday that "all substantive commercial terms relating to the potential sale of Volvo Car Corporation have been settled between Ford and Zhejiang Geely Holding Group Company".

"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 2010, subject to appropriate regulatory approvals," the automaker said in a statement.

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.

While Ford would continue to cooperate with Volvo Cars in several areas after a possible sale, the company does not intend to retain a shareholding in the business post-sale.

More details will be made available once the expected definitive sale agreement is signed in the first quarter of 2010, Ford added.

Geely was named as the favoured bidder for Volvo in October and the two companies had been said earlier to be ready to lay out an estimated timeline for completing the sale in a statement to be issued today.

Volvo was put up for sale a year ago as Ford shed its overseas luxury brands to focus on the blue oval brand.

Geely is understood to be offering about US$2bn, less than one-third what Ford paid for the Swedish unit a decade ago.

People close to the talks told Bloomberg News ahead of the Ford announcement Geely was also planning to build a Volvo factory in China after the purchase is completed. Beijing is the most likely location although the Chinese carmaker is also considering two other cities for the facility.

Ford and Geely are still finalising details and resolving sale issues such as protection of intellectual property. Geely wants to gain insights into western vehicle development and manufacturing through Volvo, people familiar with the negotiations have said.

Intellectual property protection was a stumbling block in the takeover because Ford will continue supplying components following a sale. Geely Group said last month the Swedish company would retain ownership of technology following the sale.

Geely is seeking Chinese government support for the Volvo acquisition and has hired German-based Roland Berger Strategy Consultants for advice on restructuring.