Ford is prepared to sell one of its most famous car marques, Volvo, in the most distressed market for decades in order to convince Washington that it deserves to be bailed out with a $25 billion emergency loan.

The car company, which also manufactures Mazda and Lincoln vehicles, said it was considering whether to sell Volvo ahead of tomorrow’s US Government deadline to present detailed recovery plans.

Ford, General Motors, and Chrysler last month begged Congress for a $25 billion rescue loan to help them weather the collapse of American car sales and to prevent them from going bust.

Congress refused to offer immediate assistance and told the so-called Detroit Three to return on Tuesday with plans that would show politicians in Washington that they had a viable business strategy. While Washington is anxious to protect the 3 million jobs which America's car industry provides, it is loathe to bail-out almost bust firms with taxpayer money - federal funds which may never be returned.

All three are scheduled to present their plans tomorrow and executives from the companies will be grilled in hearings on Capitol Hill on Thursday and Friday.

In a statement yesterday, Alan Mulally, chief executive of Ford, said: "Given the unprecedented external challenges facing Ford and the entire industry, it is prudent for Ford to evaluate options for Volvo. Volvo is a strong global brand with a proud heritage of safety and environmental responsibility and has launched an aggressive plan to right-size its operations and improve its financial results." He added that the review could take several months to complete.

While Volvo has struggled over the last few years, the brand is expected to be attractive to buyers from India, China or Russia. However, David Cole, the chairman of the Centre for Automotive Research, told The Times: "It is a very valuable asset but it is very difficult to say how much Ford would get for it because it is such a bad time to sell anything. With such horrible revenue declines, Ford is clearly trying to cut costs. Car manufacturing is a very capital intensive business with very high fixed costs."

The plight of the Detroit Three is expected to be clearly evidenced tomorrow when the entire American car industry is due to report its November new vehicle sales.

Mr Cole said he expected the numbers to be appalling with Ford down by around 35 per cent, General Motors falling by around 27 per cent and Chrysler declining "somewhere in the high 40 per cent range".

New car sales have collapsed after many Americans froze spending on all but essential goods such as food and gasoline as the US sinks headlong into a severe recession. To make matters worse, many banks withdrew from car financing loans - around 90 per cent of all new cars in the US are acquired with a vehicle loan.

Rick Wagoner, the chairman and chief executive of General Motors, met with the rest of the car giant's board over the weekend to draw up cost cutting proposals for Washington. He is expected to present proposals to cut executive pay and reduce the workforce.

At the weekend board meeting, Mr Wagoner is understood to have told his colleagues that applying for Chapter 11 bankruptcy protection was not an option for the manufacturer because new customers would not want to rely on such a firm for servicing and warranties if they believed the group could collapse. The rest of the GM board are understood to disagree with him.

Today on Wall Street, Ford shares jumped 3 per cent on hopes of a Volvo sale while General Motors shares sank 9 per cent.

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