What's cheaper than a fire sale? Answer: A government give-away.

After months of dead-end dealmaking in the collapsing auto industry, acquirers are finally lining up to make a run at the assets being spun off from struggling U.S. automakers led by General Motors Corp .

The only hitch, according to bankers and analysts, is that they don't expect to pay anything.

Instead, potential industrial partners for GM brands like Opel and Saab are being lured by the prospect of nearly risk-free financing brokered by governments from Washington to Berlin to Stockholm desperate to protect automotive jobs.

That makes distressed auto acquisitions far less risky than they had been during the industry's crushing decline over the past year, analysts say.

Everything has changed from last year, said Rebecca Lindland, an analyst at IHS Global Insight. This is definitely a tremendous transition time in the global auto industry.

The final round of bidders for Opel includes Fiat SpA , parts supplier Magna International , Belgian private equity firm RHJ and Chinese automaker BAIC.

The German government is expected to narrow the field this week after pressing all four to improve their offers.

But the new model for automotive deal-making is the Fiat acquisition of Chrysler, bankers say.

In that transaction, Fiat gets management control of Chrysler and the prospect of a majority share over time without committing any cash to the deal financed by the U.S. Treasury.

There is no capital changing hands in these transactions, said the banker, who asked not to be named because of his involvement in confidential auto auctions.

Analysts say the list of Opel bidders also shows how the promise of government support has stoked ambitions for the industry's also-rans to power themselves into the mainstream.

Under Chief Executive Sergio Marchionne, Fiat is aiming to catapult itself from the world's eleventh largest auto manufacturer to the central player in an alliance that would be No. 2 behind only Toyota Motor Corp <7203.T>.

The first step toward that goal is taking control of Chrysler. Marchionne could clinch that deal this week if a U.S. bankruptcy judge clears Chrysler's sale to a group that includes Fiat.

Under a plan the automaker dubbed Project Phoenix, Fiat has also said it is interested in buying GM operations in Argentina, Uruguay and Paraguay and GM South Africa and its Saab unit, now operating in court protection in Sweden.

The projected price tag: 7 billion euros ($9.7 bln) in combined funding, much of which would have to come from government coffers.

Meanwhile, Magna, which supplies parts to vehicle manufacturers, has teamed up with Russian bank Sberbank Rossii and Russian automaker GAZ in a plan that would see an investment of up to 700 million euros in Opel.

FINDING FIRST GEAR

GM is also running an independent auction for its Swedish brand Saab, which attracted 27 bidders before the automaker narrowed down the final bidders to three, according to the Swedish government.

Saab expects to pick a winning bidder by June or July. The Swedish government, eager to protect 3,400 remaining jobs at the GM unit, has offered 28 billion crowns ($3.6 billion) in support for the auto industry in Sweden.

Ford Motor Co's Volvo is also nearing the final rounds of its auction and is in talks with less than five final bidders, sources familiar with the process have told Reuters.

Even GM's gas-guzzling Hummer brand, with its fuel inefficiency and plunging sales, finally has a few potential bidders interested, the automaker has said.

One investment banker, who requested anonymity because of his involvement in confidential deals, said the reason was the promise of government aid.

Let's not fool ourselves. None of these buyers would be around if it weren't for guarantees of government assistance and the promise of fire sales.

Even so, the unprecedented government support for the global auto industry could delay the kind of shakeout that most observers believe the industry needs.

That could mean profit margins remain under intense pressure long after GM and Chrysler emerge from bankruptcy and Opel and Saab are operating under new ownership.

One of the remarkable things that is happening right now is that we have the government essentially nationalizing GM and Chrysler and the German government offering support to Opel, auto industry analyst Maryann Keller said.

The question for these governments is: What do I have to do to protect jobs? Not, what's best for the industry?

(Reporting by Jui Chakravorty Das and Kevin Krolicki; Editing by Richard Chang)

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