A Chinese entrepreneur who used to be a farmer is in talks to buy the Volvo car company from Ford as the American giant battles to stem losses.

Li Shufu sells almost 250,000 cars a year in China, although his 20-year-old Geely Automobile brand is little-known outside the country. Volvo made a fourth-quarter pre-tax loss of $736 million (£510.4 million).

Li, who has a £150 million fortune, has flagged overseas expansion as his next step. It is understood he approached Ford about Volvo a year ago, but was rebuffed.

Now it appears Ford has had a change of heart. Although the healthiest of Detroit's ailing Big Three, it is still in dire straits and desperate to raise cash to avoid a federal bailout. The company lost a record $14.6 billion last year.

Li recently predicted 25% sales growth of his Geely cars this year. Low-priced compact models include the Panda, and he plans to launch eight new models this year.

"Li has an entrepreneurial spirit and no fear," said Asian automotive analyst Tim Dunne of JD Power and Associates. "He just goes and gets stuff done."

He is understood to have the backing of Beijing authorities, which would have to sign off on any takeover, to explore possibilities. Insiders say talks are at an early stage but Ford is almost sure to take a loss on the $6.4 billion it paid for the Swedish marque in 1999.

They add that Ford has also made overtures to Chinese firms Chery Automobile and Chongqing Changan Automobile. Ford sold Jaguar and Land Rover to India's Tata Motors for $2.4 billion last June. It offloaded Aston Martin to a group of investors for $931 million in May 2007.

The US company provides engines for some Volvo cars, and the two carmakers share mechanical underpinnings on several models. Analysts say any buyer would have to be assured that Ford will remain healthy enough to provide those key components to Volvo.