Ford has confirmed it is selling Volvo to China’s Geely and said it expected the deal to be completed by the middle of next year.
Swedish based Volvo is being sold to help Ford pay off its debts.
The estimated 1.25 billion euro purchase would be the largest overseas acquisition by a Chinese carmaker.
Geely – which only made its first car 12 years ago – plans to build Volvos in China but has indicated it wants to maintain production in Sweden.
Geely has six car plants in China, making 300,000 vehicles a year.
This deal comes at the end of a year that saw China overtake the United States as the world’s biggest car market.
Another Chinese company, Beijing Automotive, is on track to buy the designs of Saab cars from General Motors including three models and two engines which it will then adapt for the Chinese market.
Saab in Sweden still faces closure unless a final offer by Dutch luxury car maker Spyker is accepted by GM. Spyker says talks are continuing.