General Motors Co. does not expect the sale of a majority stake in its Adam Opel GmbH subsidiary in Germany to a consortium led by Canadian parts supplier Magna International Inc., agreed upon today, to jeopardize the recently positive growth of Chevrolet in Eastern Europe.

Opel, instead, will be concentrating for some time on regaining and solidifying its footing in its home market, GM says.

John Smith, lead negotiator on the deal and GM group vice president-business development, expects the two brands to continue to focus on two different customer groups in Eastern Europe, with Opel attracting wealthier buyers and Chevy appealing to people with more modest incomes.

“Chevrolet occupies a more value-oriented position, and not surprisingly it does better than Opel in Eastern Europe,” Smith tells Ward’s during a conference call with journalists to discuss the details of the deal.

“Unless Opel changes its positioning, which isn’t always in a brand’s self-interest to consciously reposition itself downward, the upside for (Opel) in Eastern and Central Europe is somewhat limited,” Smith says.

Including German government loan guarantees, the deal is valued at about E5 billion ($7.3 billion) and gives Magna and its Russian partners – state-controlled OAO Sberbank and auto maker OAO GAZ Group – an equal share of a 55% stake in Opel. GM retains 35% and Opel workers retain 10%.

Magna/Sberbank has the greatest authority on operational issues, while GM will control most product-development decisions for the first few years of Opel’s new ownership arrangement.

The future of Opel and Chevrolet in Eastern Europe, especially the promising Russian market, was a key element during months of negotiations between GM and Magna.

Should Magna try to reposition Opel, it would come at the expense of Chevrolet, which until the global economic downturn enjoyed considerable sales gains in the region.

Chevrolet ranks as the top-selling import brand in Russia, with deliveries last year of 235,466 vehicles, according to Ward’s data.

But as high commodity prices were fueling Eastern Europe’s economic expansion – only to die a few months into 2009 with the sharp downturn in raw-material demand – Opel sales jumped some 49% to nearly 98,800 vehicles.

And growing the Opel brand in Russia only gets easier with the sale to Magna, since Sberbank ranks as one of the country’s leading retail-lending firms.

Also, Sberbank serves as proxy for GAZ in the deal, which according to Smith could negotiate for Opel technology. That would boost the appeal of GAZ vehicles against Chevrolet in Russia, where sales are expected to soon grow from 1.5 million vehicles annually today to 4.5 million.

“Opel will do better in Russia because of the Magna/Sberbank deal, not because of changing its positioning, but because it is part of a more compelling enterprise,” Smith says.

However, Opel’s growth outside of Europe will be muted for some years to come, he says. Due to the taxpayer-funded rescue of GM in its domestic market, Opel will not be allowed to build or sell vehicles in the U.S.

A similar situation stops Opel from entering Canada. And although the Canadian government will allow Opel to enter its market in 2012, Smith says without the ability to sell in the U.S. such an endeavor will make little sense for many years to come.

Opel also cannot sell in China before 2015, due to existing GM agreements in the country, and will be locked out of South Korea due to the GM Daewoo Auto & Technology Co. venture there.

Smith doubts it would be in Opel’s best interest to grow much outside of its home market of Western Europe. In the past, the unit has stumbled in trying to set up operations overseas.

“I’ve bore witness to Opel trying to go overseas too fast, building plants, building specific variants, with not a proportionally enlarged manufacturing and engineering crew,” Smith says.

Opel’s growth will very much be paced by what makes for good business, he adds.

“There’s a fair amount of restructuring that has to take place in Western Europe first, and I think that is where people and financial resources will be concentrated, because that’s also where most of the money can be made near-term.,” Smith says.

“There is opportunity, but it does seem to me for the next few years we’ve got to stick to our knitting here and get things in a good place in Western Europe. Because that is our home market, and we’ll obviously be running pretty hard out of the chute in Eastern Europe because of the Magna/Sberbank connection.”

The Opel deal comes after 10 months of negotiations, which also saw a competitive offer from RHJ International SA, a Belgium-based industrial holding company with ties to private equity.

GM also considered holding onto Opel and its U.K.-based Vauxhall brand in recent weeks as talks slowed. Some reports even indicated a willingness by the Detroit auto maker to let the unit fall into insolvency – two options certain to devastate relations with the German government and Opel workforce.

“In the final analysis, Magna became the only feasible option left open to GM,” Tim Urquhart, an analyst with IHS Global Insight in London, says in a note to investors today.

“The prospect of GM retaining majority ownership of Opel was unfeasible without external financial support, with estimates that GM would require $6 billion of extra financing just to keep hold of Opel.

“Plus…GM would face widescale industrial action if it attempted to keep Opel,” he adds.

GM’s newly reconstituted board of directors recommended a sale to Magna Wednesday, and the Opel Trust overseeing the auto maker gave its approval today.

Smith says some “garden variety” issues still have to be sorted out, as well as regulatory scrutiny, but the deal is expected to close by Nov. 1.

The agreement includes nearly all of GM’s operations in Russia, including its new plant in St. Petersburg.

Smith expects Opel to return to profitability by 2011 and begin repaying Germany’s loans by 2014. Investors could share in profits, such as the start of dividend payments, in 2015.

Meanwhile, Smith refutes claims GM was stalling on the deal. Earlier this month, the company’s board tabled making a recommendation, giving the appearance it was waiting until after Germany’s Sept. 27 elections to broker a deal, perhaps with RHJI instead.

“The characterization that we were dragging things out frankly doesn’t respect the amount of work involved,” he says, citing the three parties at the table – GM, Magna and the German government.

“People have been working very hard on some very complicated issues…and certainly a transaction that in addition to being an otherwise dispassionate business-to-business negotiation is one that has had some significant political overtones as well, which has been an added complexity.”

jamend@wardsauto.com