Ford is in talks with its Chinese partner, Changan Automobile Group, over the future of its Swedish Volvo unit, an unnamed source at Changan said. Ford officially put Volvo up for sale last week and rumors have been strong about a Chinese partner – including Changan competitor Shanghai Automotive Industry Corporation.

China’s National Business Daily newspaper reports that Changan president Xu Liuping held discussions with Ford and Volvo at last month’s auto show in Guangzhuo, China. A Changan executive told the paper that the talks indicated a chance of a deal occurring that would see Volvo become part of Changan’s portfolio.

Analysts have indicated that, given Ford’s close relations with Volvo, a suitor close to Ford would make the transition to new ownership easier. Volvo’s management is mostly Ford-sourced, which would make it difficult for the company to be absorbed by an unrelated third party.

In order for a foreign company to produce cars in China, they must form a joint-venture with a local company – Ford and Changan have had a joint venture since 2001. Changan also maintains close ties to Suzuki and Mazda as well as producing its own line of vehicles.

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