First, Volvo was and still is a diversified technology company. They still make jet planes, trucks, and boat motors, etc.
Second, there was a realization of their limits to the auto market. Ford, meanwhile was interested in Volvo for two reasons. Volvo had innovated the manufacturing process. Ford's founder began with an assembly innovation, this could be the next step. In addition, Volvo had a safety and reliability reputation. Ford, with such mockery voiced by the public as "FORD, Fix Or Repair Daily", they didn't have that. Once more, there were valuable lessons to learn.
Volvo saw profit growth stagnating because their niche was saturated. Ford saw Volvo possessing everything they didn't have. Ford just had a very profitable year, so they had cash. Besides, GM was buying out the other Swedish carmaker, Saab.