MOSCOW (AP) -- Russian carmaker GAZ, which once turned out the sober black sedans favored by Soviet bureaucrats, is positioned to emerge as one key beneficiary in the takeover of General Motor's Opel subsidiary by Canada's Magna International and a government-owned Russian bank.
The Russian government's participation in the deal struck over the past weekend appears aimed at giving new life to GAZ and the country's struggling car industry, as well as boosting Moscow's economic clout abroad.
Russian Prime Minister Vladimir Putin appeared to trumpet the Russian achievement by taking his prized 1956 GAZ-21 Volga model for a public spin just outside of Moscow over the weekend.
Under a tentative deal, Russia's state-controlled Sberbank and auto parts and manufacturing specialist Magna would end up with 35 percent and 20 percent stakes, respectively, while parent General Motors -- now restructuring under bankruptcy court protection from creditors -- would retain a 35 percent stake. Opel employees will hold 10 percent.
Financially strained GAZ will have no financial role but said it will play the role of industrial partner, suggesting Magna may use its factory in Nizhny Novgorod to turn out Opel cars in Russia.
The deal offers Magna and its founder, Austrian-born Frank Stronach, a second try at the potentially huge Russian market, which was on the verge of overtaking Germany as Europe's biggest before the financial crisis set in.
The global downturn has sent Russian car sales down 44 percent in the first four months of the year compared to the same period a year ago -- as demand slumps and access to consumer credit dries up. Some of the foreign carmakers that have poured investment into Russia to tap into its vast market have curtailed production, while homegrown manufacturers are struggling with debt.
GAZ is itself in battered financial state with 44 billion rubles ($1.4 billion) in debt. Its main shareholder, metals tycoon Oleg Deripaska, took a stake in Magna but had to give it back to creditor banks as he shed parts of his over-leveraged business empire, blocking Magna's first try at a Russian partnership.
GAZ wheeled out its Volga Siber last summer -- based on the Chrysler Sebring -- but GAZ's marketing efforts and hopes were quickly doused by the crisis. Opel could offer a range of small and medium-sized cars or platforms such as its Astra compact. And Magna's Magna Steyr division has assembled vehicles under contract for the major car companies, including BMW, Chrysler, Mercedes Benz, and Saab.
Russia has been determined to remain an auto manufacturing location, and has used import tariffs to encourage carmakers to locate there. Ford, Scania, Toyota, Volkswagen and General Motors have all opened plants within the past six years.
Still, GAZ and its fellow Soviet holdover, AvtoVAZ, have struggled to become competitive. A partnership with GM ran into trouble and the company is now 25 percent owned by the Russian state and 25 percent apiece by Renault and investment bank Troika Dialog. AvtoVAZ, too, is struggling, banking on nearly $1 billion in bailout loans from the government and state-backed lenders.
Some analysts believe that the state may yet create a national holding bundling together ailing domestic car manufacturers in an effort to drive efficiency and set out a strategy for the sector.
Sberbank, meanwhile, is expected to look for a buyer for the Opel stake. Analysts say it merely grabbed an opportunity to take a stake cheap in an established European carmaker when its own carmakers are cash-strapped, and is not expected to exercise any operational control. The German government will provide a bridge loan to the carmaker, while Magna and Sberbank envisage investing euro700 million euros in the company. At this early stage, it remains unclear how that cash injection would be split between the two investors.
Sberbank's head German Gref -- a former member of Putin's Cabinet -- said the deal gave Russia an opportunity to pay an "unprecedentedly low price" for a major European car producer.
While the eventual owner may well turn out to be GAZ, analysts say there are no guarantees. AvtoVAZ could also be a contender, or it might otherwise go to a combined entity that is yet to be created.
The deal also gives Russia a chance to deploy its still-formidable cash reserves by investing in Western companies and to prove it can be a reliable partner in doing so.
When Russia's VTB bank bought a 5 percent stake in EADS defense group a few years ago, it was thwarted in its efforts to raise its stake and gain a seat on the board. That provoked a strongly negative reaction in the Kremlin, which viewed the removal of barriers to Russian investment abroad as an essential quid pro quo for allowing foreigners in to exploit its vast oil reserves.
This deal shows the "scale of opportunity available for Russia as it comes out of this crisis," said Roland Nash, strategist at Renaissance Capital. "Russia went into this crisis with a serious amount of firepower and has kept hold of it. It's in a position now to use that firepower to increase its influence globally."
It also gave Russia a chance to do a favor for conservative German Chancellor Angela Merkel and her center-left coalition partner, the Social Democrats. Although they're competitors in September elections, both parties were under severe pressure to avoid factory closings.
"It's a deal that can be very well sold to the electorate -- the electorate that wants ... stability in these difficult times," said Alexander Rahr, director of the German Council on Foreign Relations and Putin biographer. "Russia will of course get something in return.
"This is part of their strategy of economic expansion in the West."
Indeed, the Kremlin, which becomes an unlikely partner in automaking with the U.S. government through Washington's stake in GM, will want to showcase its credentials as a reliable and amiable partner abroad after frustrating years of rejection in Europe.
"Russia is using its money to help the German car industry and that comes with strings attached," said Chris Weafer, chief strategist at UralSib bank in Moscow. "Russia will look for greater access to the German market."
Russia still sits on some $400 billion in hard currency reserves accumulated from oil and gas sales and has few debts.
But this time the partnership needs to work, said Weafer.
"This is a big, big test case," he said. "If there are problems with this deal, the door will slam even harder on future deals."