MOSCOW (AFP)--Opel cars will be "made in Russia" after the Germany-based General Motors (GM) unit was sold on Friday to Canadian parts maker Magna (MGA) in a consortium bid with Russian auto maker GAZ (GAZA.RS).

GAZ, Russia's second-largest car manufacturer, is poised to turn over its sprawling assembly line and distribution network to produce Opel cars for the Russian market.

And while debt-laden GAZ won't itself put up any cash as part of the bid, the deal will also be partially financed in Russia, with state-run Sberbank putting up the rubles.

For its part, GAZ brings to the table its industrial capacity and large assembly line, newly-built in 2008 with Magna's help in Nizhny Novogorod on the banks of the Volga river, 400 kilometres (250 miles) northeast of Moscow.

Citing sources close to the deal, Russian business daily Vedomosti reported last week that the consortium would aim to produce 180,000 Opel cars at the plant.

And analysts say the deal could breathe new life into the Soviet-era car maker as production grinds to a virtual halt at its factories amid falling demand.

GAZ, controlled by indebted metals tycoon Oleg Deripaska's holding, Basic Element, remains Russia's largest producer of buses, trucks, road-construction equipment and heavy diesel engines.

The company turned a profit of 153 billion rubles ($5 billion) in 2007, according to figures posted on its Web site.

But despite recent efforts to develop new models, such as the Volga Sibir sedan, GAZ has struggled to compete with an influx of foreign imports.

In addition, weighed down by the financial crisis, analysts estimate GAZ is more than $1 billion in debt, at least half of which is due this year.

The car maker's "situation is critical", said Gennady Sukhanov, an automotive analyst with Troika Dialog.

And as the Russian car market goes from bad to worse, manufacturers including GAZ have gone cap-in-hand to the state.

In March, Prime Minister Vladimir Putin pledged RUB4 billion ($129 million) in state support for GAZ as part of rescue measures for the biggest players in the domestic auto industry.

Analysts also believe the Kremlin was the main driving force behind the bid for Opel.

The deal with GM for Opel "makes sense" for Moscow because it acquires foreign know-how and furthers its goal to promote investment overseas, said Chris Weafer, chief strategist at UralSib investment bank in Moscow.

"It fits with the government's ambition to use external partnerships to both help key parts of the Russian domestic industry to modernise and also to act as conduits for domestic industries to expand internationally," Weafer said in a client note.

"The current crisis could well allow the opportunity for strategic Russian industries, such as the auto sector, to forge long-term partnerships," he added.

"Sberbank's role would only be that of state-backed financier to facilitate the deal."

Deripaska - who has seen his fortune shrink drastically from his former Forbes magazine stature as Russia's richest man - lost his 20% stake in Magna to creditors in March.

But the new tie-up will likely strengthen the relationship between the tycoon and his new Canadian partners.