A question mark also hung over the fate of the Saragoza plant in Spain, whose operations may be transferred to Eisenach in Germany, the GM executive added.

GM's European subsidiary also includes Opel's operations in Poland, as well as Britain's Vauxhall brand.

Irwin said the deal 'does not mean that Adam Opel is saved', adding, 'we all know that a lot of work lies ahead of us.' Earlier, Merkel had also warned that the road ahead would be tough for Opel.

GM had not retained a call option to repurchase Opel at a future date, although the partners had a 'right of first refusal' under the terms of the deal, Smith said.

The GM executive said they were confident about New Opel's future operations in Russia, overturning previous worries about competition with other GM interests in Russia.

After a two-day meeting in Detroit, the GM board had dispatched Smith to tell both the Opel workers and the German government of its decision.

The decision to select Magna follows mounting speculation in recent weeks that GM wanted to retain control or a dominant role in Opel because the US carmaker was reluctant to give the Russian interests in the Magna bid access to its technology.

But in line with calculations made by Opel's German trade unions, the international financial advisory group KPMG told the GM board in a report it would need up to $6.1 billion to retain its European subsidiary.

Plunging car sales resulted in GM launching earlier this year a major restructuring of its global operations, including selling off of a majority stake in Opel.

But since then, the carmaker has emerged from bankruptcy and a new GM board has been appointed. Also, there are signs the economic crisis has abated for the global car industry and the world economy in general.