Does the sale of Opel-Vauxhall to a Magna-led consortium create an orphan automaker that will struggle to compete? Perhaps something more complex and clever is afoot, writes Mark Bursa.

If there's an upside to the downturn, it should be this - an opportunity for the auto industry to shed some struggling brands, and bring about some overdue consolidation in manufacturing capacity.

In other hard-hit sectors, such as retailing or banking, strugglers have gone to the wall, or been subsumed into larger and more successful rivals. The same should be happening in the car industry, and OK, Fiat has now taken control of Chrysler - a deal that was a no-brainer for all concerned.

But apart from this, almost the opposite is happening. Instead of closing the stragglers, unwanted brands and subsidiaries are being sold off piecemeal to the first half-acceptable buyer, creating little orphan automakers that surely will struggle in the long-term. It's deconsolidation, not consolidation. The obvious model is MG Rover, cast adrift by BMW and in administration within five years.

At the centre of this process, of course, is the corporate entity that used to be General Motors. In the US, Hummer is supposedly being sold to a small Chinese company that intends, if successful, to keep it going. Saturn is being acquired by Roger Penske, who plans to source cars from Renault Samsung in Korea.

In Europe, it now looks like Saab may end up being backed into by Swedish supercar-maker Koenigsegg, while Opel-Vauxhall's sale to a consortium including Magna Corporation, Russia's GAZ group and the Russian Sberbank, is now in the due diligence phase.

What's not happening is the deal the made the most sense - a takeover of GM Europe by Fiat. Of all the major automakers, only Fiat has stepped forward as a potential acquisitor. Chairman Sergio Marchionne has made his intentions clear throughout, and has made the reasoning behind his bid transparent - any car company needs to have a critical mass of around 5.5m units of production globally in order to be competitive.

Marchionne believes only five or six companies will achieve this scale, and these will dominate the 21st century auto market. The numbers stack up - 5.5m x 6 = 33m - a reasonably dominant proportion within the 50m or so cars produced globally in a good year.

Marchionne would no doubt have made this abundantly clear to the German politicians who effectively bailed out Opel. But German chancellor Angela Merkel would not have liked the rest of what Marchionne said - for the combined Fiat-Opel-Chrysler group to work, there would have to be major cuts, including plants in Germany, with the inevitable loss of thousands of jobs.

Now jobs mean votes, and Merkel has an election to fight. So it was no surprise that Magna's bid became the preferred one. After all, Magna is not talking about creating a global group along the Marchionne 5.5m template. It's talking about completing its own transition from supplier to manufacturer, via the much-publicised 'Tier 0.5' position (contract manufacturing to you and me) that it currently occupies.

With the Fiat deal, it was obvious that there would be synergies. Many are already there - for example, Fiat Punto and Opel Corsa, plus their various derivatives, share a platform. Small diesel engines are common, a legacy of the earlier, failed, GM-Fiat deal. Some aspects of joint purchasing remain in place. Smaller factories could be shed, allowing remaining assets to be sweated, building Fiats, Opels and Chryslers off common architectures. There was sufficient brand separation for Opel to be positioned slightly above Fiat too. The deal made sense.

How will Magna achieve the same economies? Perhaps Frank Stronach has been cleverer than people have given him credit. It's very easy to conclude that, because the obviously sensible Fiat deal was rejected, the deal that is likely to be struck is inferior.

Look closely at the proposed shareholding of the new Opel-Vauxhall business. While much of the funding is coming from Russia, a very significant 35% will be retained by 'New GM' - the restructured, slimmed-down and debt-cleared automaker that will effectively be controlled by the US Government when it emerges from Chapter 11 bankruptcy protection.

Part of that deal, according to Opel-Vauxhall insiders, includes full access to the same global GM platforms and technologies that were in the product plan before 'Old GM' collapsed. Something clever is happening. Instead of a single corporate entity, the relationship between New GM and Opel-Vauxhall will be an alliance - not dissimilar to Renault-Nissan.

Take it to a logical conclusion, and at some stage in the future it's not impossible for Opel-Vauxhall to purchase a cross-shareholding in New GM - just like Nissan has done with Renault. The only difference would be a greater separation of management control - you wouldn't have a single CEO across both businesses, like Carlos Ghosn.

But you would continue to collaborate on programmes - important initiatives such as the GM Voltec range-extender EV programme. This is going ahead - and Opel-Vauxhall will have full access to the technology, building effectively the same car in Europe as the Ampera, and selling it under Opel and Vauxhall brands. Whether New GM will sell it in competition as a Chevy Volt in Europe is unclear - though it seems it will concentrate on the US market only with this model. Divide and conquer - and evidence of how the new 'alliance' might proceed.

If Opel-Vauxhall can access the New GM platforms, including small cars developed by GM-Daewoo in Korea, it's clear that there is a future for the company. And if this is the business model, it's clear that Opel-Vauxhall is not another MG Rover. Unlike the British brand, it won't be cut adrift from access to new technology or global platforms - stuff that it would simply be unable to fund on its own - as Rover found out.

What the alliance doesn't resolve, of course, is the overcapacity issue. Hard-liners even go so far as to say that if Opel-Vauxhall were to disappear completely, it would be the simplest solution to European overcapacity.

Clearly that isn't going to happen. Magna may choose to shutter some of the Opel capacity - the hapless Antwerp plant has seemed doomed whoever took over - but Magna is clearly offering to maintain more capacity than Marchionne would have. There may be some hefty job losses, but those German plants won't be closed - nor will super-efficient Gliwice in Poland. And it would be marketing suicide to close Ellesmere Port in the UK, given Vauxhall's prominence as a brand in Britain. Spain? It would be difficult to close the biggest Corsa-producing plant.

Even the IBC van plant in Luton, England, has a brighter future under Magna. Indeed, it's the sort of modern, flexible plant that Magna likes. Its survival really depends on whether Renault wants to continue its lop-sided van JV with Opel-Vauxhall's new owners.

Under this JV, Renault supplies Opel-Vauxhall with the designs and technology for its Trafic and Master van models, plus capacity in France and Spain (through Nissan). GM, which rebadges the vans Vivaro and Movano, just provides capacity at Luton for the smaller Trafic/Vivaro versions.

The JV has given Renault good scale economies, and without Renault, Opel-Vauxhall would not have been able to remain in the LCV market - there's nothing in the global GM portfolio that would do the job. The Trafic is renewed in 2012 - so Stronach needs to strike a deal with Ghosn in order to justify Luton's survival. Renault has, however, announced that its Sandouville plant in northern France would be converted to build unspecified LCVs in the future.

Could Opel-Vauxhall source a replacement van elsewhere? Tough, as most van projects are already JVs. Fiat would almost certainly have used its SEVEL JV with PSA to provide Opel-Vauxhall with vans, leaving Renault to go it alone. Perhaps Renault plans to use a common platform for Trafic and next-generation Espace MPV, which is already built at Sandouville, and would give the scale economies to replace the lost Opel-Vauxhall capacity.

If that's the case, Opel-Vauxhall has a problem. A long shot - use an updated LDV Maxus, whose intellectual property is owned by GAZ, to replace the Renaults. The van would need a lot of reworking, but with the LDV plant in Birmingham surely doomed, could the jigs and tools be moved 80 miles down the M1 to Luton?

Due diligence will throw these options into focus. Decisions will have to be made, and political interference surely will continue to influence the plans. But maybe the Magna deal has a lot more to commend it than you think.

Mark 'Coolbear' Bursa