Volvo could benefit from a Ford purchase of Rover Group's engineering centre and test site at Gaydon, Warwickshire. The manufacturer is part of Ford's Premier Automotive Group which might gain extra engineering resources.

Volvo has been forced to stop production of its C70 following a dispute with TWR boss Tom Walkinshaw, majority shareholder in Autonova, the joint venture company which builds the cars.

The dispute highlights Volvo's past reliance on outside sources for new model development and limited production runs. Volvo has been trying to buy TWR out of the manufacturing deal but has been unable to reach a settlement with Mr Walkinshaw over the value of the company. It has been making extra cash payments to Autonova “to help ease its financial situation”.

However, when managers at Volvo felt they were “getting nowhere” in negotiations they stopped the extra payments. Mr Walkinshaw then stopped production. At the heart of the dispute is a row about the Autonova financial figures for 1998, which have not yet been agreed.