The decision to scuttle loan talks comes as Ford studies options for selling Volvo, says the Swedish maker's CEO Stephen Odell.

Ford Motor Company is sending signals that suggest it could be nearing the sale of its loss-making Scandinavian subsidiary, Volvo.

The U.S. maker has put on hold negotiations with the Swedish government that would have unlocked a €200 million loan tentatively approved by the European Investment Bank.

Rumors of a sale have been rife for more than a year, ever since the automaker began dismantling its once-hyped Premier Automotive Group.  The niche luxury maker, Aston Martin was sold to a group of Kuwaiti investors, while Jaguar and Land Rover were sold to the Indian automotive company, Tata Motors.

Expectations of a Volvo sale heated up, last year, when Ford veteran Stephen Odell was appointed CEO of the Swedish company, best known for its focus on safety.  Initially, Odell said his goal was on fixing a variety of problems at Volvo, but early this year, he and other Ford executives acknowledged they were also gauging outside interest in the brand.   

“After a long period of negotiations regarding guarantees for an EIB loan, Volvo Car Corporation and the Swedish government have jointly decided to postpone the discussions on the state guarantees,” Odell said in a statement, pointedly adding, “This is due to the strategic review being carried out by Ford, which could lead to a sale of Volvo Car Corporation.”

The inability to come to terms on the loan, worth $266 million, was proving to be a frustrating setback, as Volvo has desperately needed an infusion of cash to improve its operations and update its model line-up.  Whether this is leading Ford to push harder for a sale is uncertain, however.

There have been numerous rumors, in recent months, linking Volvo to a variety of potential suitors, including the German maker, BMW.  So far, none of the reports have proved credible, however.

The seemingly likely sale of Volvo only underscores what industry analysts see as a global consolidation reshaping the auto industry.  As TheDetroitBureau.com is reporting, Volkswagen and Porsche have agreed to merge, and barring a setback in a NY bankruptcy court, Chrysler is expected to emerge from Chapter 11 restructuring under the control of Italy’s Fiat SpA.