Ford expects to complete the deal in the third quarter of this year.

Land Rover is a terrific global brand with a wonderful heritage

Jac Nasser, Ford chief executive

The German car maker is retaining the Mini marque, and selling the rest of the unprofitable Rover group to the venture capitalist firm Alchemy Partners.

"Land Rover is known throughout the world and fits perfectly into Ford's growing family of world-class brands," said Ford chairman William Clay Ford Jr.

BMW chairman Professor Joachim Milberg said: "The decision to sell Land Rover was certainly not easy. But in the light of our new strategy, we welcome the approach of Ford."

Ford's utility vehicles are big sellers in the US

Land Rover was viewed as the jewel in the crown of the Rover empire and BMW had been expected to keep hold of it.

Range Rovers, Land Rovers, Freelanders and Discoverys are produced in Solihull, West Midlands. The plant employs 9,500 people.

Last year Land Rover had worldwide sales of 177,800, an increase of 7.4% on the 1998 figure. In the US, Land Rover's second-largest market behind Britain, sales rose 37.1% last year to 29,380 vehicles.

The marque will join Ford's range of "premier" brands including Jaguar, Lincoln and Aston Martin.

"Land Rover is a terrific global brand with a wonderful heritage," said Ford chief executive Jac Nasser.

Analysts say Land Rover will be a good fit for Ford which has no great presence in the off-road vehicle sector of the British market.

FOUR-WHEEL FACTS

Land Rover production began in 1948 More than two million have been sold Sales in 1999 were 178,000 There are four models in the range

"It would add what is right now a very profitable boutique brand," said John Casesa of Merrill Lynch.

"Ford, if it executes well, should be able to take advantage of its large existing scale in sport utilities by combining the Land Rover and Ford truck platform."

About 60% of Ford's sales in the US are light trucks and minivans, compared with 50% in the rest of the world.

Land Rover began more than half a century ago, based on a US Army Jeep. It was developed by two brothers who were senior executives at Rover.

More than two million have since been sold, and it is estimated that 70% of them are still operating somewhere in the world.

The vehicle's sturdy, utilitarian qualities made it a favourite on farms, with the armed forces and with explorers.

The original, now renamed the Defender, has been joined by other models: