General Motors Corp. (GM), days from an expected bankruptcy filing, will spend $600 million to $700 million to produce what would be the only U.S.-built subcompact car, people familiar with the plan said Friday.

GM's plan comes out of a tentative deal reached last week with the United Auto Workers. The union agreed to concessions that will allow GM to turn a profit on the vehicle, something auto makers had not been able to do in the U.S. because of the country's relatively high labor costs. In return, GM agreed to build the car in the U.S. rather than China as originally planned.

The car would be built at one of the factories GM had planned to shutter as part of a government-led restructuring. It will employ 1,200 workers.

"Small cars represent one of the fastest growing segments in both the U.S. and around the world," Chief Executive Fritz Henderson said in a statement. "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.

GM's recovery plan so far calls for laying off 23,000 hourly U.S. workers. Production of the subcompact will bring that number down to 21,800.

Last week, GM and the UAW 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 72.5% of the car maker.

Under the new UAW terms, the union would own 17.5% of a restructured GM through a retiree health care trust the company had promised to fund.

UAW members voted on the deal this week, and the union is expect to soon announce whether it won ratification.

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 wouldn't say when production is slated to begin or what will become of its existing subcompact sold in the U.S., the Chevrolet Aveo.

   GM shares recently fell 23 cents, or 20%, to 89 cents.

-By Sharon Terlep , Dow Jones Newswires; 248-204-5532; sharon.terlep@dowjones.com.

(Mike Barris contributed to this report).