Construction on the project, which will include the installation of equipment to make vehicles on different underbodies, is expected to begin within weeks.
The CAMI plant in Ingersoll, Ont., has been producing the Chevrolet Equinox and GMC Terrain crossover vehicles. However, there have been hopes that GM will assign more work to the Ingersoll plant after 2015.
GM's announcement Friday was welcomed by union leaders, who embarked on an early round of contract negotiations last month to improve the chances that the CAMI plant will get additional vehicles after the current manufacturing programs end.
Dan Borthwick, president of CAW Local 88 at the plant, wouldn't discuss Friday how the negotiations were going, but said the two sides were continuing to meet on a daily basis with a March 24 target for a deal.
He said the $250-million announcement is "great news" that provides for a flex-build shop that can accommodate new vehicles in the near future.
"Hopefully, it will provide some security for our existing members and salaried staff here at GM CAMI Ingersoll," Borthwick said in an interview.
North American automakers have been gaining momentum recently as the industry recovers from the severe downturn that started in late 2008.
Last year saw the highest Canadian sales volume in a decade but the biggest hope for Ontario's auto manufacturing industry is for strengthening demand in the United States.
Industry observers have predicted 2013 North American sales will surpass last year's as the U.S. economy revives from the recession.
"We have had a strong start to 2013 with customer demand for our newest vehicles driving improved sales," GM Canada president Kevin Williams said in the company's announcement.
"This is strong confirmation that our investing in manufacturing flexibility, finding ways to bring new products to market faster, is the right strategy."
The Canadian Auto Workers union, which represents about 2,900 employees at the Ingersoll plant, asked its members last month to approve an early opening of contract talks as GM weighed the future of two vehicles made at the factory.
The CAW has said it plans a ratification vote or information meeting on March 24 but hasn't announced a deal or issued a comment on negotiations since Feb. 12, when the union began to officially exchange proposals with the company.
According to DesRosiers Automotive Consultants, General Motors brands currently account for about 14 per cent of Canadian sales of passenger vehicles and light trucks.
As of February, GM Canada was third in national sales volume — trailing Chrysler/Fiat and Ford. Together, the three U.S.-based auto companies accounted for about 47.3 per cent of Canadian sales in the first two months of 2013.