In recent years, Opel has been crucial to GM's vehicle development. (Daniel Roland / Associated Press)
Most Germans think of Adam Opel GmbH as a German carmaker, but it has been part of General Motors Corp. since 1929 and recently began to play a critical role in GM's global product development strategy.
But after the U.S. automaker nearly ran out of cash last year, it agreed to sell control of Opel in exchange for German aid to its Rüsselsheim-based subsidiary.
Under the terms of a preliminary deal struck late last month, GM seems to have come out well. It would preserve a presence in Europe by retaining a substantial minority stake in Opel of 35 percent while forging ties with the owner of Russia's No. 2 carmaker GAZ.
Under this arrangement, GM will "still have a tremendous broad-based global reach," said Jeff Shuster, executive director of automotive forecasting at J.D. Power and Associates.
Opel's other leading shareholders will be Canadian parts supplier Magna International Inc., which crafted the $1 billion deal and will take 20 percent, and Russia's state-controlled Sberbank, which will take a 35 percent stake but is expected to sell it to GAZ or another Russian automaker. Opel employees will get 10 percent. The German government, which brokered the deal, is expected to provide at least $5 billion in loans but will not have equity in the company.
With such a diverse cast of characters, the result could be a raging success -- or an unmanageable situation, European analysts say. Between GM and Opel alone, there has been tension lately. "It's far from ideal," Tim Urquhart, a London-based analyst at IHS Global Insight, said of the arrangement.
There's also a risk it could fall through. The government has left the door open to new bids, and Economy Minister Karl-Theodor zu Guttenberg said publicly that he did not favor the Magna-led offer. "Theoretically, everything's still up for grabs," Urquhart said.
Italy's Fiat SpA had proposed a deal for Opel involving a larger tie-up with GM -- and Fiat Chief Executive Sergio Marchionne reiterated his interest in Opel on Sunday. But GM executives preferred Magna's offer.
Fiat's plan would entail a consolidation of the carmakers' European operations, Shuster said. Magna, on the other hand, has only one car-making plant and is less likely to shut down Opel operations or take Opel apart.
For GM, that's a key issue. In recent years, Opel has become a crucial part of GM's global vehicle development process, which eliminates duplication by assigning various regions responsibility for key architectures, or vehicle underpinnings. Under that system, Opel developed the architecture for all of GM's midsize and compact cars, including the new Chevrolet Cruze.
The first cars featuring the Opel-designed architecture, the midsize Opel Insignia and new Astra compact, are considered to be the carmaker's finest recent models. Under the deal with Magna, GM retains access to that architecture and other engineering developed by Opel.
Meanwhile, GAZ could assemble Opel cars at its under-used factories in Russia, generating economies of scale for the small German carmaker. Opel sold only 1.46 million vehicles last year, the vast majority of them in Europe.
It's struggling against much bigger players such as Volkswagen, which has a better reputation in Europe and commands higher prices for its vehicles, said analyst Jürgen Pieper at Metzler Bank in Frankfurt.
So far this year, VW sales in Europe are down 6 percent, Fiat's are down 5 percent, while Opel's have slumped 21 percent.
"Their new products are pretty good," Pieper said. "But in that kind of situation, you need super products."
The most promising, and most uncertain, aspect of the deal is the Russian connection. Russia's market is in turmoil now, but it is expected to overtake Germany in a few years to become Europe's largest auto market.
After GM's former Russian partner AvtoVAZ joined the Renault-Nissan alliance, GM began to discuss the possibility of producing Chevrolet models in Russia with GAZ. GAZ is owned by billionaire Oleg Deripaska, an oligarch with close ties to Prime Minister Vladimir Putin.
Magna founder Frank Stronach also had dealings with Deripaska, who bought a big stake in Magna in 2007 which he divested a year later when the financial crisis erupted.
"They'll move aggressively in Russia," said Jim Hall of 2953 Analytics in Birmingham. "The potential there is huge."