General Motors' Australian unit Holden will build new small car in Australia alongside the Commodore from the third quarter of 2010 with support from the federal and South Australian governments.

Holden said in a statement the front wheel drive vehicle in sedan or hatchback forms would be based on GM's global Delta small car platform with petrol, diesel and alternative fuel I4 engines.

Other cars using the architecture will include the next generation Chevrolet Cruze plus the Opel, Vauxhall and Saturn Astra. It was primarily developed by Opel in Russelsheim, Germany for GM markets around the world.

Local reports said the Australian car would be a local variation of the upcoming Chevy Cruze and might revive the name 'Torana' used on Holden's first own-brand 'four' which was derived from the Vauxhall Viva in 1967 and subsequently developed to offer six and eight-cylinder engines.

Holden has rebadged small Australian-made Nissan and Toyota models as its own during the 1980s under a government model-sharing plan and, in the 1990s, built and sold the Opel-designed Vectra for a couple of years.

The new car will be built at GM Holden's Elizabeth manufacturing facility in South Australia with design and engineering work at the company's headquarters in Port Melbourne, Victoria.

Start-stop hybrid technology and capacity to run on alternative fuels such as E85, diesel, LPG and compressed natural gas (CNG) are all being considered for the vehicle's development, Holden said.

It will be GM Holden's first locally produced car beyond its current range of larger vehicles since the Asian economic crisis ended Vectra production in 1998.

The programme will require 500 to 600 existing employees at Elizabeth and is estimated to provide 500 to 600 local supplier positions.

Flexible manufacturing infrastructure will be introduced to the Elizabeth plant to make it capable of producing a series of GM global vehicles in years to come.

It also provides the opportunity to develop an export programme for the new vehicle, particularly to other right hand drive markets around the world.

The vehicle will be built in the south body shop of the Elizabeth facility, which was used for the Vectra in the late 1990s.

Toyota and Ford, who also build cars in Australia, similarly plan four-cylinder models in production by 2011. Ford has confirmed Focus manufacture, replacing cars currently imported mostly from South Africa.