STOCKHOLM, Jan 28: Swedish carmaker Volvo has agreed to sell its car division to Ford of the United States for 50 billion Swedish kronor (5.68 billion euros, $ 6.5 billion), it said on Thursday.

The Swedish television news journal Rapport, quoting sources close to the deal, said that Fiat of Italy had put a higher bid on Volvo but had demanded that the heavy trucks division be included in the deal, and Volvo had preferred to sell to Ford.

Analysts and media reports have speculated on a full or partial sale of Volvo for months. Ford, Fiat, Volkswagen of Germany and US General Motors (GM) had been mentioned as potential bidders.

"This is a solution which strongly enhances both the prospects for Volvo cars, its employees and for the Volvo Group as a whole," Volvo chairman Haakan Frisinger said.

Ford has informed Volvo that Volvo Cars is to remain managed from Gothenburg, west Sweden, while having access to Ford's engineering, distribution, marketing andfinancial resources.

"Volvo Cars' future prospects will, by being an important part of one of the world's largest and most profitable groups, improve considerably," Volvo Chief executive Leif Johansson said. Volvo Car's president Tuve Johannesson is to remain in his position.

The Volvo brand name will be jointly owned. Volvo will use it for commercial products, and Ford will have the right to use it for passenger cars, minivans, sport utility vehicles and light trucks.

Analysts here said Ford is a good match for Volvo, which will be able to profit from Ford's extensive resources for research and development, and also gain full access to the large US market.

Volvo is also deemed to be the quality brand that Ford needs, between their luxury Jaguars, and smaller Fords on the hard-fought European market. The Volvo line would compete more with Saab, partly owned by GM.

Specialists here pointed out that it is important that Ford will let "Volvo be Volvo", and keep the brand name's strong profile of highquality with a strong focus on safety.

"Volvo is a premium automotive brand with unique appeal that represents a good opportunity to profitably extend our lineup and grow the Ford business worldwide. Volvo is a perfect complement to the Ford family of brands worldwide," Ford president and chief executive Jaques Nasser said in a statement.

Ford has earlier been reported to be in talks with BMW of Germany and Japanese Honda. A fortnight ago Volvo bought 13 per cent of the shares in Swedish truck maker Scania, and signalled interest in a full merger. Analysts said the sale of the car division would provide Volvo with enough cash to place an outright bid for Scania.