The automaker said Thursday that projected demand for the Chevrolet Impala Limited and Chevrolet Equinox means the consolidated line will remain active until 2016. It had originally been slated to close next summer.
The Oshawa complex also has a flexible manufacturing line that builds the 2014 Chevrolet Impala, Chevrolet Camaro, Buick Regal and Cadillac XTS.
GM spokeswoman Adria MacKenzie said about 650 people work on the consolidated line, and there are "no anticipated changes to employment levels as a result of this scheduling action."
"All scheduling adjustments are subject to market demand," she said.
The announcement brings good news to an industry that has failed to fully capitalize on an upswing in consumer interest as high manufacturing costs and an unfavourable exchange rate push production south of Canada's borders.
The Oshawa plant had been slated to close despite winning the J.D. Power Silver Plant Assembly Line Quality Award earlier this month, a top award for performance.
Carlos Gomes, a senior economist and automotive industry expert at the Bank of Nova Scotia, said GM's move was consistent with the industry's strength.
Canada will have record vehicle sales this year and the United States has roughly sold 15.5 million so far, the best level since 2007, Gomes said.
"Moving forward, we're likely to see continued gains in Canada and across North America," he said.
"However, the reality is that Mexico is likely to lead the way as they're getting several new plants in 2014, so they'll likely see the strongest gains in vehicle production next year."
Unifor, formerly the Canadian Auto Workers union, said the move shows that the skills and efficiency of the workers at that plant makes it worth keeping open.
"By maintaining production over the next few years, we have a chance to bring in another product and keep the plant open longer," Ron Svajlenko, president of Unifor Local 222, which represents workers at the plant, said in a statement.
While the announcement brings hope that the beleaguered sectors will see a rebound in production in 2014, Derek Burleton, deputy chief economist at TD Bank Financial Group, said the long term outlook for the sector remains "somewhat murky."
"The competitive challenges are still very much an issue," he said.
"The sector's been under a lot of pressure and this year's auto output has been disappointing."
GM's announcement Thursday and a $700-million investment by Ford for its Oakville plant last month, however, are "two bits of news provide some confidence that we could see some growth return in auto production in 2014," Burleton said.
"I don't think anybody's expecting output to return back to its peak of five or 10 years ago, but the hope is that this year could mark the low point and then we could see growth over the next few years."
GM has already moved some overflow Equinox production from its Canadian Automotive Manufacturing Inc. (CAMI) plant in Ingersoll, Ont., to a facility in Tennessee that used to build the now-defunct Saturn, and plans to move GMC Terrain vehicles to Mexico in 2016.
That plant is also in the running to win production of the new Equinox models in 2015.
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