Zhejiang Geely Holding Group, China's largest private-run car maker, agreed on Sunday to buy Ford Motor's
Details of the deal will be provided at a news conference later on Sunday, Volvo's spokesman Per-Ake Froberg said.
The takeover underscores China's arrival as a major force in the global auto industry and ends nearly two years of talks with Geely over the sale of Volvo -- the last sale from Ford's former premier group, which also included Aston Martin, Jaguar and Land Rover.
The deal, which both sides aim to close in the coming months, will free up cash for the number two U.S. automaker and enable it to focus on its core Ford brand.
Geely, parent of Geely Automobile Holdings <0175.HK>, was named by Ford as the preferred bidder for its loss-making Swedish unit in October 2009.
It plans to keep the brand and operations -- including Volvo's headquarters, production facility and research center -- in Sweden.
Geely chairman Li Shufu is already planning a factory in Beijing which will make 300,000 Volvo branded cars, or as many Volvos for China as are now made abroad for foreigners.
China raced past the United States to become the world's top auto market last year, with sales surging 46 percent to a record 13.6 million units. It is keen to move into Western markets but has so far lacked the technology and brand recognition to do so.
The Volvo deal should help the Chinese carmaker to get around some of those obstacles more quickly.