The competition to buy General Motors Corp.’s (NYSE: GM) Opel and Vauxhall units heated up last Friday as the three primary suitors were reportedly joined by an unidentified Chinese automaker.

Meanwhile, a bankruptcy filing is not certain in the GM restructuring case, and reports that the Obama administration will steer the automaker into bankruptcy as early as this week are premature, Reuters reported on Friday, citing a source familiar with the situation.

Negotiations will likely continue right up to the May 31 deadline, the source said, with the Chrysler LLC case – where the process continued until the deadline – serving as a good comparison.

Magna International Inc. (NYSE: MGA) appeared to gain the early edge Friday in the race to buy Opel, surpassing rival bidders Fiat S.p.A. (OTC: FIATY) and RHJ International Inc. (PINK: RHJIF).

German officials said they were leaning toward the offer submitted by the Magna, a Canadian car parts group, because its plan would leave open four manufacturing plants located in the country.

With Federal elections looming in September, any merger plan containing the possibility of massive job losses would appear to be dead on arrival.

A German government official, who preferred to remain anonymous, said the Magna offer was gaining significant support in Berlin.

“There is a rather clear preference for Magna’s offer emerging within the government,” the official told Reuters.

GM will make the final decision on who ultimately prevails in the battle for Opel, but the German government will have a say because it is seen as the likely source of financing guarantees for the eventual winner.

Even though the Chinese automaker submitted a letter expressing interest in purchasing Opel a day after the May 20 deadline for bids, a concrete offer may not be forthcoming, Bloomberg News reported, citing people familiar with the matter.

“The risks are huge” for a potential Chinese bidder, Yu Bing, an analyst at Ping An Securities in Shanghai told Bloomberg. “Chinese carmakers aren’t big or experienced enough and lack the technology and management skills to buy something like Opel.”

According to GM, Opel needs $4.6 billion (3.3 billion euros) in new government financing to survive, Bloomberg reported. The carmaker is selling a majority stake in its European operations while preparing for a probable government-forced June 1 bankruptcy.

The Magna and RHJ bids include cash, while Fiat’s calls for $9.8 billion (7 billion euros) of financing, Bloomberg’s sources said. Fiat’s bid is two-pronged: It contains an offer for the Opel and Vauxhall units, and alternatively offers to also buy GM’s operations in Brazil and Argentina.

Fiat Chief Executive Officer Sergio Marchionne aims to create the world’s second-largest car company, second only to Toyota Motor Corp (ADR NYSE: TM), by combining Fiat and Opel with Chrysler and GM Europe and possibly GM’s Latin American operations.

Magna’s primary interest in Opel centers around increasing sales in Russia to about 1 million units, GM Europe CEO Carl Peter Forster said last week in a Bloomberg interview.

Opel, which is headquartered in Ruesselsheim, near Frankfurt, and traces its roots in Germany back to the 19th century, has manufacturing facilities in St. Petersburg and Uzbekistan, which could accelerate growth in the two countries.

Magna’s plan has also gained favor because it will keep the existing European management team in place.

Source: Chinese Express Interest in Opel, GM Bankruptcy Still “Not Certain”