GM announces $500M investment for small car

Company Chairman and CEO Rick Wagoner announced the size of the investment Thursday at the Lordstown factory near Cleveland. The sprawling complex now makes the Chevrolet Cobalt and Pontiac G5 small cars.

GM announced in June that the Lordstown factory would be retooled to make the new Chevrolet Cruze compact.

The $500 million investment includes $350 million in Lordstown. The company also will build 1-liter to 1.4-liter four-cylinder gasoline engines for the Cruze at a new factory to be built in Flint, Mich.

The Cruze will be launched in Europe and Asia next year. It will come to the U.S. in second half of 2010.

The new car is expected to get around 45 miles per gallon on the highway. The most efficient 2009 Cobalt or G5 with a manual transmission gets up to 37 mpg, GM says.

"Our goal is for the Chevrolet Cruze to lead in fuel economy in this very competitive car segment," Wagoner said in a statement.

The investment in Lordstown, about 50 miles southeast of Cleveland, is good news for a region hit hard by the demise of the U.S. steel industry.

GM already is adding a third shift at the Lordstown complex to keep up with heavy demand for Cobalts.

Cobalt sales were up 16.4 percent through the first seven months of the year, while G5 sales were down about 1 percent.