Ford, Geely expect to close Volvo deal in Q1

Ford Motor says it's agreed all substantial commercial terms in a deal to sell its Volvo Car unit to China's Zhejiang Geely Holding Group, parent of Geely Auto. The Chinese company confirmed the news on the same day.

While some work on financing and government approvals still remains to be completed before signing, Ford and Geely expect to sign the pact in the first quarter of 2010 and close it in the second quarter.

The two companies did not reveal the amount of the deal. Analysts estimate it's between 1.8 and 2.3 billion US dollars. That's in stark contrast to 6.4 billion dollars Ford spent ten years ago to acquire the Swedish brand.

Ford decided to sell Volvo to focus its management resources on the Ford, Lincoln and Mercury brands.

Chinese car makers are taking advantage of a crisis related shake-up of the auto industry. Corporations in China are tapping into Western brands while taking advantage of a fast-growing home market, which is seen passing the United States this year.

However, there is still a significant technology gap between domestic Chinese auto makers and their global rivals. This gap has domestic car makers looking for acquisitions of overseas technology and designs as the global auto industry restructures.