The iconic Swedish auto brand Volvo is to be handed over to Chinese automotive firm Zhejiang Geely after it agreed terms for the sale with Volvo's US parent company Ford.
Ford confirmed that a deal was all but sealed, adding that "a definitive sale agreement will be signed in the first quarter of 2010 subject to appropriate regulatory approvals.
"Ford Motor Company confirmed today 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 Limited," Ford said in a statement on Wednesday.
Confirming the report, union leader Miroslav Milurevic, the head of Volvo's metal workers in the town of Olofstroem, told local Swedish television "now it is clear. Volvo cars is sold to China's Geely."
The number-two US carmaker picked Geely in October as its preferred bidder for Volvo in a deal estimated to be worth around $2 billion (1.4 billion euros). Ford had acquired Volvo in 1999 for $6.4 billion.
Geely began as a supplier of refrigerator parts some 20 years ago, but in 1997 moved into auto manufacturing. The firm now operates six car assembly and power-train manufacturing plants across China, employing around 12,000 people.
The Volvo deal is important for Geely as it will bring the company European car making technologies otherwise unobtainable, and underlines China's growing economic clout.
The deal is the second to shake up the Swedish auto industry after General Motors last week said it had failed to sell off its unit Saab, and would instead wind the company down starting in January.
Editor: Andreas Illmer