Ford will tell Washington today that it is prepared to shift away from building big petrol-guzzling vehicles to focus on small fuel-efficient cars in an effort to convince US lawmakers that it deserves to be bailed out with a $25 billion (£16.8 billion) emergency loan.

It is also planning to tell Congress that it is considering the sale of Volvo to reduce costs and cutting the pay of Alan Mulally, the group’s chief executive. He earned $21 million last year.

Ford, General Motors and Chrysler begged Congress last month for a $25 billion rescue loan to help them to weather the collapse of sales, but they were refused immediate assistance and told to return today with viable strategies.

Although Washington is anxious to protect the three million jobs that the car industry provides, it is loath to bail out almost-bust firms with taxpayers’ money that may never be returned.

Times Archive, 1980: Chrysler may need huge new loans to avert bankruptcy

The situation at Chrysler, according to informed sources, is desperate

• Times Archive, 1980: $567m loss by GM is America's worst

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All three companies are scheduled to present their plans today and executives will be questioned in hearings on Capitol Hill on Thursday and Friday.

Yesterday, Mr Mulally said: “Given the unprecedented challenges facing Ford and the entire industry, it is prudent to evaluate options for Volvo.” He added that the review could take several months. Although Volvo has struggled in recent years, the brand is expected to be attractive to buyers from India, China or Russia.

David Cole, the chairman of the Centre for Automotive Research, said: “It is a very valuable asset, but it is such a bad time to sell.”

The plight of the so-called Detroit Three is expected to be clearly illustrated today when the US car industry reports November new vehicle sales. Mr Cole said that he expected the numbers to be appalling, with Ford down by about 35 per cent, GM falling by about 27 per cent and Chrysler declining “somewhere in the high 40 per cent range”.

New car sales have collapsed after many Americans halted spending on all but essential goods. Banks have also withdrawn car financing; about 90 per cent of new cars in the United States are bought with a loan.

Rick Wagoner, chairman and chief executive of GM, met the rest of its board over the weekend to draw up cost-cutting proposals.

Yesterday on Wall Street, Ford shares closed 5 per cent down at $2.55 while GM shares sank more than 12 per cent to $4.59.

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