FORD is preparing to sell Volvo, the Swedish car group it bought eight years ago, in a move that could raise $8 billion (£3.9 billion) for the struggling Detroit giant.

City sources say that a decision in principle to sell Volvo was taken a fortnight ago, but that the timing of the sale had yet to be decided. No bank had been appointed to handle the transaction.

Volvo is the flagship of Ford’s Premier Automotive Group (PAG), a stable of luxury European marques it built up during an expansionist phase in the 1980s and 1990s.

It began dismantling the group last year when it faced a bleak financial situation in its core business. It sold Aston Martin earlier this year in a deal worth £479m, and this week it will receive indicative bids for Jaguar and Land Rover, the two other British members of the PAG. The pair, which are being sold as a single business, are expected to fetch up to £1 billion.

Volvo is larger than Aston Martin, Jaguar and Land Rover. It employs 27,500 people and makes about 500,000 cars a year at plants in Swe-den and Belgium. Britain is its third-largest market after America and Swe-den. It made its name as a maker of sensible, safe cars, although in recent years it has adopted a sportier image.

While the PAG as a whole loses money – $327m last year on sales of $30 billion – Volvo is understood to be profitable. Ford does not disclose separate figures for the Swedish group, but analysts have speculated that it made about $500m last year. Ford paid $6.95 billion for Volvo in 1999, buying it from AB Volvo, the truck maker.

Analysts estimated Ford might receive $8 billion in a sale, but pointed out that the dollar had weakened in the intervening years.

A sale of Volvo would, like the disposal of Jaguar and Land Rover, be complicated by the level of integration built up between Ford and its divisions. Volvo and Ford models share common components and designs, while Volvo supplies electronic and safety systems to Ford plants.

Automotive industry sources said the timing and speed of the sale would depend on the level of interest that came from rival carmakers and private-equity groups.

“If they have a good offer from a Western carmaker, they would be able to move fast, because the integration issues can be sorted out quite quickly. But if it’s private equity, it will all need to be worked out in advance so they can do their normal due diligence,” said one source.

Renault, which planned a tie-up with Volvo before the Swedish firm was sold to Ford, could be a bidder, while other automotive bankers believe BMW, Hyundai or a Chinese manufacturer may be in the running.

“They are getting a lot of people coming to them with ideas because Volvo is an attractive asset. If they get the right one they could act quickly,” the source said.

Ford, which reports its interim figures next week, declined to comment. It said it had announced a strategic review last year and that no decision had been taken on the future of Volvo.

The company, which like all the Detroit giants is facing crippling pension and healthcare costs and tough foreign competition, is in the middle of a turnround plan devised by chief executive Alan Mulally and chairman Bill Ford.

Last year Ford lost $12.7 billion – equivalent to nearly $7 for every Ford share. It now has a stock-market value of $16.3 billion, with the shares closing last week at $8.97. The sale of Jaguar and Land Rover will take a step forward this week with indicative offers from a group of buyout firms.

Those involved with the discussions say Ford has imposed strict conditions of secrecy on would-be bidders, even to the point of vetting potential advisers. “They are completely paranoid about leaks,” said one person close to the talks.

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