GM Generali

   DOW JONES NEWSWIRES 
 

General Motors Corp. (GM), on the brink of a Chapter 11 bankruptcy filing, said Friday it plans to build a subcompact car in one of its idled U.S. facilities to boost its competitiveness with foreign auto makers.

"Small cars represent one of the fastest growing segments in both the U.S. and around the world," said Chief Executive Fritz Henderson. "We believe this car will be a winner with our current and future customers in the U.S."

A site will be selected in the future, GM said. Also, a specific product wasn't identified, but the company said the vehicle would add to GM's portfolio of U.S.-built fuel-efficient small cars including the Chevrolet Cruze and Volt.

The project would be part of a continued revamping at the auto maker, which is expected to file for bankruptcy protection on Monday and begin a U.S. government-led restructuring.

Early this week, GM and the United Auto Workers agreed to a new restructuring plan that would give the union a significantly smaller stake in the company than previously envisioned, and leave the U.S. government owning as much as 70% of the car maker. Under the new UAW terms, the union's health-care trust would own 17.5% of a reorganized GM, in exchange for retiree health-care concessions. An earlier revamping worked out by the Treasury Department and GM would have given the union 39% and the government 50%.

"I would like to personally thank the UAW for agreeing to work with us to ensure our overall manufacturing competitiveness in the United States," Henderson said Friday. The CEO said it "takes a special effort by everyone to bring a domestically produced small car to market in a cost-competitive and profitable way - but that is what we are going to do together."

The re-tooled plant will be capable of building 160,000 cars annually, which can be a combination of both small and compact vehicles.

GM shares recently fell 16 cents, or 14.7%, to 95 cents.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com