General Motors Co. is considering reversing course and hanging on to Opel, and it is easy to figure out why. Keeping a foothold in Europe is vital for GM, and the company may be able to afford it.

Six months after the old GM put Opel up for sale and three months after it agreed tentatively to sell the company to Magna International Inc., the new GM is rethinking the matter.

The German government wants GM to sell a controlling stake to Magna. It has offered to provide billions of euros in aid if GM approves Magna's bid, passing over a rival offer from RHJ International, of Belgium. But since GM's board declined recently to pick a winning bidder for Opel, the Magna deal has been thrown into doubt.

"Keeping Opel makes the most sense," said a person involved in the rescue talks. "Next best would be RHJ International, followed by Magna. Nevertheless, if we follow the political wishes, the order could be exactly the opposite."

Putting on the brakes

The fortified GM that emerged from bankruptcy in July has a number of reasons to hold on to Opel.

1. A truly global company needs direct control of its operations in Europe, one of the world's three largest auto markets along with the United States and China.

2.Opel's technical center in Ruesselsheim, Germany, is the engineering axis for the Delta compact platform--the basis for such upcoming cars as the Chevrolet Cruze and Orlando--and the Epsilon mid-sized platform, the underpinning for the new Buick LaCrosse sedan and others.

3. The worst is over for Opel. The new Insignia mid-sized car is a success. The compact Astra, which debuts at the Frankfurt auto show in September, looks great and promises a lot of technology for the money.

4. GM's European dealer and distribution strategy needs complementary positioning of the Chevrolet and Opel brands. It doesn't want to turn them into direct competitors.

5. GM wants to keep control of Opel in Russia, a market with huge long-term potential.

6. Intellectual property for all GM vehicles produced worldwide would remain under the company's strict jurisdiction.

7. Opel would have more freedom to decide how and where to make cost cuts. If another group gets Opel--with support from German loan guarantees--the restructuring options will be limited by union and political pressure

Neither Magna nor RHJ is prepared to save Opel with its own money. The plans call for a limited capital infusion and billions in German taxpayer money. The public loans would be repaid with Opel-generated cash.

So why couldn't GM do the same: relaunch Opel with borrowed money and pay it back with Opel cash flow?

Serious money

RHJ International, a private equity firm with American roots, has offered 275 million euros (about $393 million) for a 50.1 percent stake in Opel, with GM retaining 39.9 percent and 10 percent put aside for employees. RHJ is seeking about $5.4 billion in state aid.

Magna International and Russia's Sberbank have been forced to increase the amount they have pledged for a 55 percent stake in Opel — to about $429 million from about $143 million. But they still would need about $6.4 billion in loan guarantees.

To keep Opel, GM has to come up with some serious money: more than $6 billion. To regain control of the 65 percent of Opel put in a trust June 1, GM has to repay about $2.1 billion given by the German government to keep Opel alive.

Then GM needs a cash cushion of at least $4.3 billion to complete the turnaround.

GM's board is not expected to convene until Sept. 8-9, when Opel will be discussed again.

Germany, which pushed GM into accepting the deal with Magna, probably won't want to offer big loan guarantees to GM. But after Germany's national elections Sept. 27, the new government could have a different attitude.