Despite the fact that GM declared bankruptcy and is now partially owned by the US government, it will invest US$1 billion to create two new models of cars in Brazil, which will help create 1,000 jobs.

The Brazilian government recently reduced taxes on automobiles, which lowered the price of GM cars and led to a large increase in sales. The Brazilian part of GM is not owned by the US government, nor will the Brazilian-produced cars use American parts. Also, funding for the new project will be split between the company and Brazil-based loans. Though car sales in the US are lagging, June was the best-selling month ever for cars in Brazil, and auto companies are expecting high sales for the rest of the year.

The company plans to create new small and mid-sized cars at the Gravatai plant in Rio Grande do Sul, and production will begin in 2012. Though the majority of the cars will be for domestic sales, they may also export them to Mercosur countries and possibly other developing countries.

The investment is the largest GM has ever made in Brazil, as the company seeks to expand in growing markets. In 2008, GM sold 580,000 cars in Brazil, and company executives expect to sell 600,000 in 2009.