Ford Motor Co
Both sides expect a sale of the Swedish auto brand to close in early 2010, they added.
The unusual update planned on the closed-door negotiations is intended to help Geely clinch financing and to speed approval from the Chinese government by sending a signal that both sides are closing in on a deal, according to the people who were not authorized to discuss the talks.
China's largest private automaker, Geely, is keen on acquiring modern technology to upgrade its car line-up and bring it closer to becoming a global competitor.
For Ford, closing the sale would provide it with cash it could use toward Chief Executive Alan Mulally's goal of speeding up debt repayment as the automaker moves toward profitability it has projected for 2011.
Ford was the only U.S. automaker to avoid bankruptcy and a U.S. government bailout thanks to the $27 billion borrowing program it completed before the crushing decline for the U.S. auto market that began in 2008.
Helped by government subsidies, the Chinese car market overtook the United States as the world's largest earlier this year and is expected to build on that in 2010.
U.S. auto sales, by contrast, collapsed in 2009 to the lowest since 1970 at about 10.3 million vehicles and are expected to partially rebound next year.
Ford's progress toward a sale comes as its traditional rival, General Motors Co
GM said last week it had been unable to reach a deal with Dutch luxury car builder Spyker Cars NV
Spyker revived talks to buy Saab this week, but it remains highly uncertain whether the two sides can reach an agreement by GM's year-end deadline, a person familiar with those talks said on Tuesday.
Volvo, known for its safety engineering, has been the more successful brand by far. It outsold Saab four-to-one in 2008, with global sales of nearly 375,000 vehicles.
INTELLECTUAL PROPERTY AN ISSUE
One of the outstanding issues in the discussions between Ford and Geely has been how to treat the intellectual property the U.S. automaker would transfer in a sale of Volvo, the sources said.
With access to financing and a booming market, Chinese automakers have been kicking the tires in Detroit for the past few years, but deals have been limited and slow to close.
Earlier this month, Beijing Automotive Industry Holding Co, China's fifth-largest automaker, acquired some of Saab's assets, including intellectual property for the 9-5 and 9-3 sedan platforms and tooling from GM.
A separate deal by GM to sell its Hummer SUV brand to a group led by Chinese equipment maker Sichuan Tengzhong Heavy Industrial Machinery has been delayed because of a review by the Chinese government.
Ford CEO Mulally said last week the Volvo talks with Geely were progressing well and Ford expected to have an announcement soon.
We haven't put any timetable because they are very sophisticated conversations and we want to make sure we get it right for both parties, Mulally said on Friday.
Ford and Geely have not disclosed a price for Volvo, but sources with knowledge of the deal have put it closer to $2 billion than the $6.45 billion Ford paid in 1999.
Ford wrote down the value of Volvo by $2.4 billion following a review of the brand's prospects in January 2008.
Ford picked the parent company of Hong Kong-listed Geely Automobile Holdings Ltd <0175.HK> as its preferred bidder for Volvo in October.
At least three major Chinese banks have agreed to extend loans to Zhejiang Geely Holding Group, including Bank of China Ltd <601988.SS>, China Construction Bank Corp <0939.HK> <601939.SS> and Export-Import Bank of China, sources have said.
(Additional reporting by Bernie Woodall; editing by Andre Grenon)