Ford has named Chinese car maker Geely as its preferred bidder for Volvo.
However, it could be months before a definitive agreement is signed because detailed agreements on a range of issues including intellectual property remain to be resolved.
A Ford insider stressed to Autocar that the naming of Geely is only the beginning of the negotiation process, and has quelled speculation that a deal could be completed by the end of the year.
"There's no timeline pinned down," he said. "We are still concentrating on getting the right agreement, rather than trying to conclude an agreement.
"What today's announcement means is that we think Geely has the potential to be a responsible owner of Volvo, which means respecting its position and being able to add capital investment to grow and develop that position."
Lewis Booth, Ford Motor Company executive vice-president and chief financial officer, said in a statment, “Ford’s objective in our discussions with Geely is to secure an agreement that is in the best interests of all the parties.
“Any prospective sale would have to ensure that Volvo has the resources, including the capital investment, necessary to further strengthen the business and build its global franchise.
“Ford believes Geely has the potential to be a responsible future owner of Volvo and to take the business forward while preserving its core values and the independence of the Swedish brand. But there is much work that needs to be completed in the more substantive discussions that are agreed to take place. We have no specific timeline to conclude the discussions.”
While Ford would continue to co-operate with Volvo in several areas after a possible sale, it said it does not intend to retain a shareholding in Volvo.
Ford has declined to comment on whether it is also continuing negotiations with other potential buyers of Volvo.
A Geely spokesman was unavailable for comment.
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