Magna International (TSX:MG.A) dodged what some industry observers say could have been a disaster this week when General Motors Co. dashed plans to sell its money-losing Opel division to a Magna-led group that wanted to build cars and sell them in the growing Russian market.

Stock in the auto parts producer jumped more than 10 per cent on Wednesday as investors appeared to heave a sigh of relief that Magna, already Canadas largest parts company, would not become the next major automaker.

The deal held promise for Magna, but also lots of risk, especially if the European transaction began to undermine Magnas traditional parts sales to Volkswagen and others who would see Opel as a competitor.

"Investors were focused on the negative (aspects) and there were quite a few that were obvious," said David Tyerman, an auto parts analyst at Genuity Capital Markets.

"Those have all gone away."

Magna had been seeking a 55 per cent stake in Opel alongside its lender, Sberbank of Russia, and reached a tentative agreement in September.

The deal wasnt without controversy and complications, ranging from political tension to threats by Magnas parts customers to back out of their agreements if the company became their competitor.

Some analysts also questioned whether Magna had the smarts to plunge head-first into selling cars after specializing for years in building transmissions, drive trains and other components.

"Magna senior management arent execs with marketing experience in automobiles," Tyerman added.

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