Ford discusses Volvo sale to China Changan -paper

SHANGHAI Tue Dec 9, 2008 6:07pm EST

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SHANGHAI (Reuters) - Ford Motor (F.N) is in talks to sell its Volvo car business to its China partner Changan Automobile Group, the National Business Daily reported on Tuesday, citing an unnamed source at the Chinese company.

Changan president Xu Liuping held discussions with Ford and Volvo during last month's auto show in the Chinese city of Guangzhou, the newspaper said.

The report did not provide details of the talks, but quoted an unidentified Changan executive as saying there was a chance for a deal. Changan is one of China's six biggest auto groups.

Ford and Changan spokesmen in China could not be reached for comment on Tuesday. The U.S. automaker operates a car venture with Changan's listed arm, Chongqing Changan Automobile Co (000625.SZ), which makes mid-sized Focus sedans.

Ford, which owns Volvo, and General Motors Corp (GM.N), owner of Saab, are trying to sell those units as they seek a multi-billion dollar government bailout.

Industry sources say U.S. auto companies have approached a range of Chinese companies about possible asset sales, but deals would be difficult to reach because of the risks involved as both the U.S. and Chinese auto markets slow sharply.

China's Dongfeng Motor Group Co is monitoring the situation at Detroit's troubled auto makers, but a source with direct knowledge of the matter told Reuters last week that it was too early to say if it would be interested in buying any assets.

Chery, a Chinese auto maker that secured a $1.45 billion loan from Import-Export Bank of China this week, will use the money to improve its product quality rather than buying U.S. auto assets, its chairman Yin Tongyao told the Shanghai Securities News on Monday.

(Reporting by Fang Yan; Editing by Andrew Torchia and Ken Wills)

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