Mr Odell said the deal should be completed by the end of June.

The deal comes as Volvo reports rising sales. Mr Odell said that global sales in the first two months of this year were up 27% over the same period a year ago.

He added: 'We have not really seen much benefit from scrappage schemes but the segments of the market in which we compete are showing signs of improvement.'

The new S60 – shown at Geneva and described by the company as its sportiest ever vehicle – is also expected to boost figures, with Volvo forecasting sales of 90,000 S60s per year. 

Built on a shortened version of the S80 platform, the new S60 is slightly larger than its predecessor and features a host of Volvo's safety systems including the first volume application of its pedestrian safety system as well as the advanced stability control, which has been designed to identify potential skids earlier.

Mr Odell said 'Our cars are becoming more exciting to drive and more appealing to look at. If you can have industry-leading environmental and safety and wrap it into a desirable shape then that is compelling.'

The car goes on sale early this summer and will be made at Ghent in Belgium.

Mr Odell also said that he expects engineering and manufacturing to remain in Europe into the future. 'I'm sure Geely will add manufacturing facilities for us in China which will boost opportunities for us in what has become the largest car market in the world.'