Although China's carmaker Geely is Ford's first choice in the sale of Volvo, rival bidder Konsortium Jakob "will not give up".

U.S. auto maker Ford has received a tempting offer from Chinese automaker Geely, China’s largest private automaker, to purchase its Volvo unit. According to an statement from Ford, the Chinese company is its first choice in the bidding process.

Geely and Ford have therefore agreed to enter into exclusive negotiations over Volvo, and are expected to announce the development soon.

“Ford believes Geely has the potential to be a responsible future owner of Volvo and drive the operation forward while at the same time preserving the company’s core value and its independence as a Swedish brand,” writes Ford Chief Financial Officer Lewis Booth in a statement.

According to Bloomberg, Geely is prepared to pay about $2 billion for Volvo, less than a third of what Ford paid a decade ago. Ford acquired Volvo in 1999 for $6.45 billion from Volvo AB. Volvo has lost more than $1 billion in recent years.

Ford said it did not intend to retain a shareholding capacity in Volvo once a sale is made.

John Fleming, chairman of Ford's European operations, including Volvo, said that "any sale also would need to take into account the significant connections between Ford and Volvo in terms of continuing component supply, engineering and manufacturing."

Volvo CEO Stephen Odell said he and the iconic Swedish firm's management team welcomed the development as a "positive step forward."

"At Volvo, we are continuing to keep our attention firmly fixed on engineering and building great Volvo cars, to reduce our cost base and to return the business to sustainable profitability at the earliest possible opportunity," said Odell in statement released by Ford.

However, Konsortium Jakob AB, the Swedish investor group that also wants to buy Volvo, told Bloomberg that it will not abandon its bid. Jakob founder Magnus Sundemo, who is also head of the engineers’ union at Volvo, said that suppliers were worried that Volvo’s technology may be abused by Geely.

“We’re not giving up,” he told the news bureau.

Geely Group, one of China's largest privately owned carmakers, is the latest Chinese firm to eye expansion into overseas markets as competition at home intensifies.

Little-known Sichuan Tengzhong Heavy Industrial Machinery signed a tentative agreement with General Motors in June to buy the Hummer nameplate as the ailing US automaker sought to dispose of non-core assets.

In July, state-run Beijing Automotive Industry Holding said it had planned to buy GM's Opel unit, though the two failed to reach agreement because of intellectual property rights concerns.

Saab in February filed for bankruptcy protection and its troubled owner General Motors announced it would cut the Swedish carmaker loose as part of a vast restructuring plan, saying at the time that it wanted Saab to be independent by 2010.

Saab has made a profit only once since GM bought a 50 percent stake in the company nearly 20 years ago and has continually struggled to draw customers to show rooms.